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Trelleborg acquires Maine Industrial Tire

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TRELLEBORG, Sweden—Trelleborg Wheel Systems S.p.A. has acquired Maine Industrial Tire L.L.C., the Wakefield, Mass.-based solid tire maker, in a deal that will add more than $90 million in annual sales to Trelleborg's ledger.

Trelleborg Wheel, a unit of Trelleborg-based Trelleborg A.B., did not disclose the acquisition price at this time.

Maine Industrial Tire was owned by a group of investors and senior management headed by the Ganz family, whose relationship with the company goes back to the founding of Ganz Tire in 1922.

Bryan Ganz, CEO for Maine Industrial Tire, said Trelleborg was a “natural buyer” for Maine Tire, considering the companies' interaction over the past several years. Trelleborg bought the pneumatic tire assets of Maine Tire's Xingtai, China, plant last year and before that had been the European distributor for several years for GPX International, Maine Tire's predecessor company.

Negotiations began in earnest this past summer, he said.

“We felt Trelleborg would be an excellent custodian of the (firm's) assets and a good fit for the employees,” Mr. Ganz said, noting Trelleborg has offered to retain all of Maine Tire's staff, including Troy Kline, who will be CEO.

“They made a clear commitment to us to keep the company intact,” he added.

Mr. Ganz and his brother Neil Ganz are stepping down as officers; Mr. Ganz said he signed a two-year non-compete agreement.

Maine Tire produces solid tires for a variety of vehicles, especially for forklifts, generating sales last year of about $92 million with 650 employees. The company operates plants in Red Lion, Pa., and Xingtai, China.

Trelleborg said the “bolt-on acquisition” is part of its strategy to strengthen its positions in “attractive and profitable market segments” and broaden its industrial tires portfolio, which focuses on solid tires used in warehousing, logistic operations, airports, etc.

“The acquisition strengthens our position as a global leader and a strong local business partner, not least in the world's two largest industrial tires markets—China and North America,” said Maurizio Vischi, president of Trelleborg Wheel Systems.

“The acquired company has a highly attractive portfolio of advanced products and favorable profitability performance.”

Prior to this deal, Trelleborg's annual sales were split roughly 60/40 agricultural/industrial, according to company documents. The addition of Maine Tire will push that mix closer to 50/50. Trelleborg Wheel Systems' sales in 2011 were $596 million, and through the first nine months of 2012 sales were 4 percent ahead of 2011.

The deal will double the company's sales presence in North America to more than $170 million, or roughly one-fourth of Trelleborg Wheel's global sales.

In addition to solid tires for vehicles such as forklifts, Maine Tire also develops and produces solid specialty tires for areas such as construction, underground mining and waste management. Trelleborg said it expects the deal will generate undisclosed synergies.

Maine Tire's brands are Brawler, Maine Tire and MITL.

The acquisition in effect reunifies the companies' plants in China. In early 2011 Trelleborg acquired the pneumatic tire production assets of Maine Tire's Hebei Starbright Tire Co. Maine Tire retained control of the solid tire assets at that site.

Maine Industrial Tire traces its roots to two pioneering families in the tire business—the Ganz family of Massachusetts and the Elowitch family of Maine, who formed Maine Rubber in 1949. The firms eventually became part of GPX Tire International, then became Maine Tire in 2010 following GPX's bankruptcy.

Trelleborg did not say at this time how Maine Tire will be integrated with its existing North American sales operation, Trelleborg Wheel Systems Americas Inc. in Fairlawn, Ohio, near Akron.

Separately Mr. Ganz said he will continue to pursue a legal case against the U.S. government, challenging the constitutionality of a new law that allows the U.S. to impose countervailing duties retroactively. The case tracks back more than five years to dumping duties placed on OTR tires the Ganzes' GPX International were importing from China.

Last March, spurred by a federal appeals court ruling in the case, Congress passed a law allowing the Commerce Department to apply countervailing duties to products from non-market-economy (NME) countries, in some cases retroactively as far back as 2006.

Mr. Ganz and others are challenging the constitutionality of the new law before the U.S. Court of International Trade, claiming it violates the U.S. Constitution's Ex Post Facto clause, which forbids retroactive criminalization of behaviors or activities, and the Fifth Amendment's guarantee of due process and equal protection under the law as guaranteed by the Due Process Clause.
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