Doublestar to acquire financially troubled Hengyu Technology Group

QINGDAO, China — Qingdao Doublestar Group plans to acquire financially distressed Chinese tire maker Shandong Hengyu Technology Group, a diversified producer of passenger, truck/bus and industrial tires.

Qingdao Doublestar — majority owner of South Korea's Kumho Tire Co. Inc. — is pursuing the deal through its Jilin Jixing Tire Co. Ltd. subsidiary. It said acquiring Hengyu Technology "will help the company's expansion and capacity optimization and gain advantages in competition."

Dongying City, China-based Hengyu Technology — also known as Headway Technology — is undergoing bankruptcy restructuring. As of mid-2018, Hengyu Technology's unaudited market value was listed as $190 million, while the stockholders' equity was pegged at negative $107 million.

Hengyu Technology lists annual capacity of 650,000 truck and bus tires and 6 million passenger tires, along with undisclosed capacities for engineering tires and military tires, Doublestar said.

The capacities at the Dongying plant could be raised to 800,000 and 10 million units, respectively, Doublestar said, when a facility upgrade is completed.

Doublestar is considered the world's 27th largest tire maker, based on fiscal 2017 sales of $1.04 billion.

Doublestar's Qingdao factory is rated at 4 million truck/bus and 6 million passenger tires annually, the company said, while a second site in Shiyan, Hubei Province will have annual capacity for 1.5 million truck/bus and 5 million passenger tires once a relocation project that started in June 2018 is completed.