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May 29, 2013 02:00 AM

SRI to acquire Dunlop assets in Africa

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    DURBAN, South Africa (May 29, 2013) — Sumitomo Rubber Industries Co. Ltd. has struck a deal with India's Apollo Tyres Ltd. for Apollo's Ladysmith, South Africa, car and light truck tire factory and the rights to the Dunlop brand name for Africa for $60 million.

    Apollo Tyres retains its Durban, South Africa, truck and OTR tire plant and will continue to make and sell Apollo-, Vredestein- and Regal-brand tires in Africa through a sales and distribution network it will set up across the continent.

    SRI's deal includes Apollo's sales networks throughout Africa and production and sales rights to the Dunlop brand in 30 countries in Africa and two bordering the Indian Ocean. SRI already owns the rights in 20 African nations, so the deal "greatly increases the scale" of Sumitomo's tire sales business in Africa and "accelerates the pace of our global expansion and development."

    Apollo Tyres South Africa reported sales of $275 million in its most recent fiscal year; the companies did not disclose how much each would retain under the agreement.

    The deal also calls for the two companies to undertake contract manufacturing of their respective brands at each other's facility to have locally manufactured products available for the market, Apollo said.

    The companies said they plan to retain all employees in the two plants, where Apollo is wrapping up work on a $40 million, three-year modernization project.

    Sumitomo said it plans to expand capacity at Ladysmith by about 35 percent by 2016 to 12,000 units a day; it did not disclose an expected investment for this project.

    With the acquisition of these business operations, the Sumitomo Rubber Group will secure the rights to use the Dunlop brand throughout the entire African continent, come into possession of a manufacturing base in South Africa.

    Apollo Chairman Onkar Kanwar said, "This partnership with SRI is a win-win situation for both organizations. SRI gets a manufacturing location on the continent and control over the Dunlop brand, which they also use in many other countries across the world."

    Mr. Kanwar added that the deal will ensure that Apollo continues to expand the presence of its Apollo- and Vredestein-branded business globally.

    Apollo has controlled the South African production units and the Dunlop-brand distribution in the countries outlined since 2006 when it acquired Dunlop Tyres International (Pty) Ltd. in a deal valued then at $62 million.

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