Bekaert Acquires Two Bridgestone Steel Cord Plants
On January 31 Bridgestone Corporation entered into a definitive agreement to sell 100 per cent of the shares held in its Italian and Chinese steel cord manufacturing subsidiaries to Belgium’s NV Bekaert SA. The manufacturing subsidiaries to be sold are Bridgestone Metalpha Italia S.p.A. (BMI), based in Sardinia, and Guangdong Province based Bridgestone (Huizhou) Steel Cord Co., LTD. (BSSH). As part of this transaction, Bridgestone has entered into a long-term tyre cord supply agreement with Bekaert to ensure a stable supply of quality cord. Bridgestone and Bekaert will complete the transactions once all applicable governmental and regulatory approvals are received. The transaction has an enterprise value of approximately 70 million euros, and is expected to close in the second quarter of 2010.
Combined, the two factories produce 40,000 tons of steel cord per annum and employ more than 430 staff. The Italian plant has been the primary supplier of steel cord to Bridgestone plants in Europe since 1996. The BSSH facility in Huizhou opened in 1997 and was one of two Bridgestone-owned steel cord facilities in China. Its sale to Bekaert and the concentration of Bridgestone steel cord at the remaining facility in Shenyang will, notes Bridgestone, allow it to streamline its steel cord business, thereby making the company more competitive.
According to Bridgestone, the Japanese manufacturer is one of the most vertically integrated companies in the tyre industry, internally producing many of the raw and intermediate materials used in the development and manufacturing of its strategic tyre products. Prior to the announced sale, it operated seven steel cord plants worldwide – in the USA, Italy, Thailand, Huizhou and Shenyang in China plus Kuroiso and Saga in Japan – supplying this product to the Group’s tyre manufacturing facilities.
This agreement, says Bridgestone, will allow it to further focus on developing innovative materials for use in the company’s strategic tyre products within a more streamlined operation, all while securing a stable supply of standard steel cord specifications from an external supplier with whom it has a strong relationship. Bekaert has acted as a key supplier of steel cord to Bridgestone for many years. In addition to an existing steel cord supply arrangement between the two companies, Bridgestone and Bekaert in the past participated in a joint venture centred upon the development and manufacture of steel cord. The new agreement, adds Bridgestone, will lead to an enhanced relationship between the companies and is “expected to contribute to an even more prosperous future for both”.
Bekaert notes that the integration of the two plants will strengthen its position in the tyre cord market, while the long-term supply agreement further enhances Bekaert’s status as an important external supplier of tyre cord to the Japanese tyre major. “Bekaert has always enjoyed an outstanding relationship with Bridgestone,” commented Bekaert CEO Bert De Graeve. “This agreement will lead to enhanced cooperation and supply with a leading customer and will significantly advance Bekaert’s strategy of building and growing a global tyre cord business.”