Dunlop Aircraft Tyres confirms sale talks

Wednesday 28th September 2016 | 0 Comments

DATL has confirmed that it is looking for investors, but declined to give further details at this stage
DATL has confirmed that it is looking for investors, but declined to give further details at this stage

Birmingham-based Dunlop Aircraft Tyres Ltd (DATL) has confirmed that the company is looking for new investors. And this means that “initial discussions” with “a number of interested parties” are already underway.

According to the company’s executive chairman Ian Edmondson, the goal is to find a suitable partner to help the company continue to move forward at its current rate of positive growth: “Our shareholders are now seeking to find a new investor who is in a position to help the business maintain the outstanding growth record that it has delivered in recent years.”

Ian Edmondson’s full statement reads: “Dunlop Aircraft Tyres is the world’s only specialist designer, manufacturer and retreader of aircraft tyres. We continue to deliver strong growth and have doubled the size of Dunlop Aircraft Tyres’ business since being acquired by AAC Capital Partners in 2007. We have a great position in attractive markets and are targeting a similar performance over the next five-years.

“We have had many recent successes, including securing one of the largest contracts in the company’s history when Dunlop was selected by Boeing to support the global fleet of C-17 Globemaster III military transport aircraft.

“Our shareholders are now seeking to find a new investor who is in a position to help the business maintain the outstanding growth record that it has delivered in recent years. With this in mind, initial discussions are currently underway with a number of interested parties.

“In the meantime, the management is focused on continuing to achieve growth through product innovation and geographic expansion – including the development of our first retreading and distribution facility in the United States to support customers across the Americas – which received FAA approval in February of this year”.

The news confirms the analysis published a week ago in “Ready for take-off: is Dunlop Aircraft Tyre Ltd (DATL) up for sale?”, which was also published in the Retreading Special supplement along the September issue of Tyres & Accessories magazine. Tyres & Accessories understands that the interested parties comes from a diverse range of backgrounds including those from private equity through to companies that “see aircraft tyres as complementary to their existing businesses”.

Global aircraft tyre market worth over a US$1 billion

The general thesis of “Ready for take-off” was that a private equity owned tyre maker such as DATL is well-placed to receive takeover attention in the current market and that such attention is likely to come from Asia where the market is growing fast.

This view is supported by third party research from a number of sources, which value the global aircraft tyre market at US$1.11 billion in 2015 and predict it will grow to $1.37 billion by 2020 (a compound annual growth rate of 4.35 per cent). Indeed this data, which was produced by Research and Markets, suggests growth will be drive by increasing demand for aircraft and frequent replacement requirement and growing passenger traffic, which has caused the growth in demand for commercial aircraft.

However, as we discussed in the T&A article, there are also regional political drivers. These centre on Asia in general   where the relaxation of regulations related to air transport combined with growing regional GDP is fuelling growth and especially China where government policy encourages domestic players to enter the aircraft tyre sector.

For this reason the Asia Pacific region is expected to exhibit the highest growth rate in the aircraft tyre market between 2015 and 2020, according to Research and Markets. This growth in aircraft tires market can be attributed to rising air transport in the Asia-Pacific region.

At the same time, the global aircraft tyre segment is experiencing a trend towards radialisation. Currently the majority of tyres are still made with bias construction, however, as with virtually every other tyre segment and market, manufacturing is now radialising. According to Research and Markets, the radial segment is projected to grow at a comparatively higher compound annual growth rate – something that is driven by the need for reduction in operational cost of airlines as well as increased fitment of radials on newer, more economical and ecological aircraft.

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