TRELLEBORG, Sweden — Trelleborg A.B. has agreed to sell its Trelleborg Wheel Systems (TWS) business to Yokohama Rubber Co. Ltd. (YRC) for $2.3 billion in a cash and debt-free basis.
The deal comes three months after speculation surfaced that the Japanese tire maker was interested in acquiring the Trelleborg unit, which generated $1.17 billion in sales last year on the sale of agricultural tires and wheels.
The transaction, which will in effect double the size of Yokohama Rubber's off-highway tire business, is set for completion "in the latter part of 2022" subject to regulatory approvals, the companies disclosed in separate announcements.
Yokohama Rubber said the acquisition will contribute to the expansion of its off-highway tires (OHT) business. That accounted for $977 million in sales last year, which YRC sees as a "future growth driver."
Yokohama's target now is to improve the ratio of consumer tire sales to commercial tires, which stands at 2:1 now, which would help bring the sales composition of the group's tire business more in line with the overall market and secure earnings growth.
The deal builds on YRC's mid-2016 purchase of off-road tire maker Alliance Tire Group (ATG), which has since bolstered group sales by around 20%.