Apollo Concludes Vredestein Banden Acquisition
The Apollo Tyres acquisition of Vredestein Banden BV, now officially concluded, has been described by Vredestein Banden CEO Rob Oudshoorn as a “win-win combination for both companies.” With all regulatory approvals and place and consent from the Judge of the Dutch Courts granted, Apollo now holds a 100 per cent share in the Netherlands based manufacturer. While official statements on the acquisition give no purchase price for Vredestein-Banden, the Wall Street Journal notes that a ‘person familiar with the situation’ disclosed a sum of 175 million euros.
“This is a strategic alliance for us and will bolster Apollo’s plans for its European customers,” commented Onkar S Kanwar, chairman & managing director, Apollo Tyres Ltd. “The fit between the two companies spans the entire spectrum of R&D, products and people to manufacturing and markets. It is a synergistic match and our aim is to increase Vredestein’s global value in the coming years.”
Apollo points out that the April 29 bankruptcy of former parent company Amtel-Vredestein has not affected Vredestein Banden BV. The manufacturer, acquired by Russia’s Amtel-Vredestein NV in 2005, was protected by a ring-fenced financing arrangement and generated a turnover of approximately 307 million euros in the 2008 calendar year. The Indian based company states that the acquisition strengthens its ongoing plans for the European market and provides Vredestein with opportunities to leverage its proximity to a larger industry player in terms of costs, people, products and access to markets beyond the European Union. Currently more than 30 per cent of Vredestein’s products are sold in the German market, however the firm possesses an established network of sales subsidiaries spanning key markets in the EU and US. Vredestein tyres are also shipped globally, notably to the Middle East.
“We will bring to Apollo our edge in passenger car tyre technology alongside an understanding of the European market,” stated Rob Oudshoorn. “At the same time, Apollo can offer us access to the non-European markets, valuable manufacturing expertise and assistance with bringing down costs by leveraging the purchasing power of a larger entity. I have closely watched Apollo’s acquisition and integration with Dunlop South Africa, and the way they went about the merger speaks highly of the Apollo management’s outlook on people and implementing best practices.”
Vredestein Banden BV currently employs around 1,500 people and has constantly achieved a CAGR of 8.5 per cent in revenue over last five years, a figure Apollo notes is significantly higher than the industry growth rate in Europe. The company’s manufacturing unit in Enschede, around 150 kilometres east of Amsterdam, produces around 5.5 million tyres per annum, including passenger car tyres between 13 and 24-inches in diameter, two wheeler, industrial and agricultural tyres. More than 70 per cent of output dedicated to the manufacture of high performance tyres and a second brand, Maloya, is also produced.
Oudshoorn expresses a positive view of the next steps Vredestein Banden will take with its new owner: “This partnership with Apollo will bring the desired level of stability to our operations and our people. We have gone through a period of uncertainty and I am positive that we now have the right platform to truly harness the growth potential of which Vredestein is capable in the future. We have the people, we have the technology and now we have the right partner.”
“We will continue to run Vredestein Banden under the leadership of the current Vredestein management,” added Apollo vice chairman & joint managing director Neeraj R S Kanwar. “As is our norm, the idea going forward is to ensure we leverage on each other’s strengths for combined benefits and better products and services for our customers.” Kanwar further commented that a comprehensive integration process will begin before the end of June 2009. Areas of particular focus will be research and technology, products and brands, corporate purchase and finance. At the end of the process, which will involve managers from both companies, a consolidated plan for the short and medium term will be implemented.
The acquisition process began in November 2008 when a global bidding process was initiated by Amtel Vredestein NV. The process culminated with the signing off on all requirements, overseen and authenticated by the Supervisory Judge in the Almelo Court in The Netherlands. Nomura, CMS Derks Star Busmann and KPMG acted as advisors to Apollo Tyres Ltd for the transaction. J A D M Daniels of Daniels Huisman acted as trustee for Amtel Vredestein.