TOKYOYokohama Rubber Co. Ltd. (YRC) has struck a deal to buy off-road tire maker Alliance Tire Group for $1.18 billion.
The move expands Yokohama's OTR tire business measurably and puts the Japanese maker into the agricultural tire sector for the first time.
Yokohama's deal is with global investment firm KKR & Co. L.P. and other concerned parties to purchase all of the shares of Alliance Tire Group B.V. (ATG), the Amsterdam-based holding company. The acquisition is expected to be finalized on July 1, after com-pletion of all necessary closing procedures, including regulatory approvals, YRC said.
KKR bought a controlling stake in ATG in April 2013 from an affiliate of private equity firm Warburg Pincus. Yogesh Mahansaria, founder of ATG, retained an undisclosed ownership stake in the company.
Alliance reported sales of $529 million in fiscal 2015, with operating income of $95 million, according to Yokohama. ATG has three tire plantsin Hadera, Israel; and Tirunelveli and Dahej, India, the latter of which opened just last year. The company also contracts out some production to manufacturers in China and Taiwan.
YRC produces OTR tires at a plant in Onomichi, Japan, and via an off-take agreement with Shandong Xingda Tyre Co. Ltd. of Dongying, Shandong, China, but does not produce or sell agricultural tires. Yokohama's OTR tires range up to 49- and 51-inch rim diameter radials. The firm said in its 2014 annual report it is developing 57-inch tires.
Yokohama noted that it expects demand for farm and forestry tires to increase as a result of the growing use of agricultural machinery, which is crucial to improve agricultural efficiency to meet the increasing food needs for the world's growing population.
Yokohama disclosed plans in early 2015 to commit $1 billion in investment over five years to expand and upgrade its tire production worldwide, increasing annual production capacity 13 percent by 2017 and nearly 31 percent by 2020. It recently earned a top supplier award from Caterpillar Inc. in the heavy-equipment maker's Supplier Quality Excellence Process (SQEP).
Warburg Pincus and Mr. Mahansaria joined forces in July 2007 to acquire majority control of what previously was known as Alliance Tire Co. (1992) Ltd. of Hadera, Israel, in a deal valued at $150 million.
Alliance Tire is represented in the U.S. by Alliance Tire Americas Inc. in Wakefield, Mass.
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