DURBAN, South Africa—Sumitomo Rubber Industries Ltd. (SRI) 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 via 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 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.
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.
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.