Apollo Sets its Sights on Dunlop Zimbabwe
Life has been hard for Dunlop Zimbabwe in recent months, now the company is being targeted for takeover by India’s Apollo Tyres, it has emerged. Dunlop International CEO Mark Hankinson is expected to travel to Harare in the next two weeks, the Zimbabwe Financial Gazette reported. Hankinson, whose group controls 75 per cent of Dunlop Zimbabwe is quoted as saying “We are talking to a number of people.”
The newspaper reports that proceedings are already at a relatively advanced stage. Apollo officials are said to have visited the country late last year to hammer out the deal with Dunlop and contract a Harare law firm, Scanlen & Holderness, to oversee a due diligence examination. Scanlen & Holderness, is then believed to have signed up Bulawayo-based legal practitioners Webb, Low and Barry to conduct the exercise on their behalf. Due diligence was reportedly completed in mid-December.
“Dunlop does not believe that it is large enough to continue in the world market so the relationship is key for the consistence of material supplies and it is a long term vision since the company wants to attach itself to someone bigger,” the Financial Gazette quoted sources as saying.
The entry of foreign players will alleviate the foreign currency difficulties that have haunted the tyre manufacturer. The company requires at least US$500 000 to manufacture tyres on a weekly basis, according to reports
Dunlop Zimbabwe temporarily halted operations at the end of 2005 as the result of an acute foreign currency shortage. At the time managing director Phil Whitehead said the Reserve Bank of Zimbabwe had failed to supply foreign currency allocations for several months. Then the government, courtesy of Industry and International Trade Minister, Obert Mpofu, stepped in and provided US$350,000 towards raw materials and imports.
Apollo Tyres is rated at the world’s 16th largest manufacturer and has a large domestic marketing network of over 119 offices spread across India. The company has 4500 dealerships, more than 3000 of which are exclusive outlets run under the Apollo Tyre World, Apollo Radial World and Apollo Pragati Kendra brand names.