FRANKLIN, Tenn.Carlisle-brand tire producer Carlstar Group L.L.C. made two moves recentlyagreeing to sell its industrial belting business and acquiring industrial solid and pneumatic tire supplier Marathon Industries Inc.that focus the firm's resources squarely on the tire and wheel business.
The deal to sell the belting business, to tapered roller bearing manufacturer Timken Co., will garner Carlstar $220 million in proceeds.
While the decision to sell our belts business was not an easy one, its product portfolio is an excellent strategic fit for Timken, said Carlstar CEO John Salvatore. The divestiture will allow Carlstar to focus on growing our core tire and wheel business....
Neither Carlstar nor American Industrial Partners (AIP)Carlstar's owner since early 2014commented specifically on how the proceeds will be used, but the companies did issue a statement: AIP is fully committed to providing the financial and operational resources required to grow and support our core tire and wheel business at Carlstar Group.
For the 12 months ended June 30, Carlstar Belts generated approximately $140 million in sales, the parties said. That scale of business would put Carlstar's annual tire and wheel activities at about $625 million to $650 million, based on the size of the former Car-lisle Tire & Wheel business in early 2014 when AIP acquired it from Carlisle Companies Inc. for $375 million.
Timken President and CEO Richard Kyle said acquiring the Carlstar belting business expands our offering in existing and complementary end markets and broadens our ability to bring customers a diverse package of premium mechanical power transmission products and services.
The transaction, expected to close in the third quarter, is subject to customary government and regulatory approvals and will be funded with a combination of cash and debt, Tim-ken said.
Carlisle put the tire and wheel business together with the industrial belting business in 2010 after failing to find a buyer for the belting business in the two years prior to that.
Carlisle at the time said it expected to generate synergies by integrating these two units, which have similar manufacturing processes and shared some common customers.
Carlstar's acquisition of Kent, Wash.-based Marathon Industries expands the firm's industrial portfolio into the small (tires up to 8 inches in rim diameter) solid polyurethane and pneumatic flat-free categories.
Financial terms of the transaction were not disclosed, and Carlstar did not disclose Marathon's annual sales, earnings, staffing, etc.
Carlstar will change Marathon's name to Marastar L.L.C. but will keep the 20-plus-year-old firm's headquarters in Kent, Wash. Carlstar did not disclose what, if any, manufacturing assets Marathon has in Kent.
Combining Marathon with our business will expand our leadership position in the specialty tire market and strengthen the breath of our product portfolio, Mr. Salvatore said.
Integrating the two companies will allow Carlstar to leverage our collective know-how and provide our customers with enhanced service that they have come to expect, Mr. Salvatore said, adding that Marathon's products and markets are a strategic fit for Carlstar.
Specifically, Carlstar said Mara-thon's lawn and garden tires and accessories complement its own offerings in these markets, while also supporting construction, industrial and materials-handling markets.
Carlstar's portfolio of brands comprises Carlisle, ITP and Marathon tires and Black Rock, Unique and Cragar wheels.
Marathon was founded in the 1990s, starting with a flat-free polyurethane bicycle tire. The company branched out over time to include flat-free wheelbarrow, hand-truck and lawn-mower tires. The firm's largest tires are in pneumatics for lawn mowers and flat-free for various industrial applications.
Among Marathon's better-known brands is the Universal Fit line available in wheelbarrow and hand-truck sizes in both flat-free and pneumatic versions. The company also offers a flat-free sealant designed to seal punctures up to 1/8th inch.
Marathon Industries President Jon Foster will continue under Carlstar's ownership as president of Marastar, a wholly owned subsidiary, reporting to Mr. Salvatore.
Mr. Foster said the two firms look forward to building upon our foundation together in order to best serve the specialty tire market.
Marathon is active both in the OE and replacement markets. In the aftermarket it distributes its products through independent dealers and through several hardware and lawn care chains, including: Home Depot; Lowe's; Ace, TrueValue and Do It Best hardware stores; Northern Tool & Equipment; Grainger Industrial Supply; etc.
Separately, Carlstar hired Thom Clark, an 18-year industry veteran, as its vice president of original equipment sales and emerging market development.
Mr. Clark previously worked with Group Michelin, where he held positions as the managing director Mexico, managing director India and as a commercial director in North America, Carlstar said.
Thom has a unique industry experience in North America and International growth markets, Carlstar's Mr. Salvatore said.
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