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KKR to acquire Alliance Tire Group

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AMSTERDAM—Global investment firm Kohlberg Kravis Roberts & Co. L.P (KKR) has agreed to buy a controlling stake in Alliance Tire Group (ATG) from an affiliate of private equity firm Warburg Pincus L.L.C.

Yogesh Mahansaria, founder of ATG, will maintain an undisclosed ownership stake in the company and partner with KKR to continue growing the business, KKR said.

Terms of the transaction, which is subject to customary closing conditions—including receipt of regulatory and third-party consents—were not disclosed. KKR did not comment on what a “controlling” stake represents in terms of percentage share ownership.

Warburg Pincus and Mr. Mahansaria jointly acquired majority control in July 2007 of what previously was known as Alliance Tire Co. (1992) Ltd. of Hadera, Israel, in a deal valued at $150 million. That deal included a commitment to build a plant in India to complement Alliance's plant in Israel.

The new owners invested $100 million to build a farm tire plant in Tirunelveli, Tamil Nadu, India, which started production in 2009.

Prior to getting involved in the bid for Alliance, Mr. Mahansaria was CEO of India-based Balkrishna Tyres Ltd.

Employing more than 2,500 worldwide, ATG is a developer, manufacturer and supplier of off-highway tires with a focus on the agricultural, forestry and construction industries. Besides the factories in India and Israel, ATG has R&D facilities in Israel, India, the U.S. and South Africa.

The company's primary brands Alliance, Galaxy and Primex are available in more than 120 countries, ATG said. ATG added the Galaxy and Primex brands in late 2009, buying them from GPX International Inc. through the U.S. bankruptcy court system.

ATG reported sales of $500 million in fiscal 2011, making it the 46th largest tire maker worldwide.

ATG is represented in North America by Alliance Tire Americas Inc. of Wakefield, Mass.

Founded in 1976, KKR is a New York-based global investment firm with $75.5 billion in assets under management as of Dec. 31, the company said. Led by Henry Kravis and George Roberts, the firm said it manages assets through a variety of investment funds and accounts covering multiple asset classes.

KKR's stake in ATG is being made through investment funds and will be supported by a financing tranche led by private equity firm TCW/Crescent Mezzanine L.L.C. with additional participation by the Ivy High Income Fund, ATG said.

“We would be delighted to have KKR as our new incoming partner. Our team is impressed by KKR's franchise and its strong track record,” Mr. Mahansaria said.

“KKR's investment will enable us to continue to expand into new markets, make strategic acquisitions and help scale our global presence. We would also like to thank Warburg Pincus for its support during the past six years as it helped create and build ATG into the global industry leader that it is today.”

Warburg Pincus did not respond to Tire Business' requests for comment.
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