Sibur assets go to Pirelli/Russian Technologies for 222M euros
On July 25 Pirelli, Russian Technologies and Sibur Holding signed an agreement to transfer the former Amtel-Vredestein Kirov passenger car and light commercial vehicle tyre plant to the joint venture formed by Pirelli and Russian Technologies on November 26, 2010. The transfer is to take place before November 2011; the agreement signed on July 25 also entails the transfer of further assets that should lift the joint-venture’s production capacity from seven million units – the Kirov plant’s capacity – to a total of 11 million units by 2014. The transfer of all these assets will take place in exchange for a total consideration of 222 million euros, divided on a pro-quota basis between the partners, with a payment of 55 million euros in 2011 and 167 million euros in 2012.
The factory will produce Pirelli brand winter tyres, particularly studdable versions, for the Russian and CIS replacement markets. Pirelli and Russian Technologies anticipate that the joint-venture will hold a market share of approximately 20 per cent. The joint-venture’s sales are expected to amount to approximately 300 million euros in 2012, growing to over 500 million euros in 2014. This sales growth will result in part from a 200 million euro investment in plant upgrading and capacity increases that will be implemented over a three-year period from 2012 to 2014. According to Pirelli and Russian Technologies, double-digit profitability will be reached from 2013 onwards, once the start-up phase is over. Pirelli will consolidate the joint-venture at the moment of acquisition as per the terms of the management agreement.
Within the context of the agreements relating to the joint venture being formed by Russian Technologies and Pirelli, the latter has the possibility of raising its stake in the joint venture from 50 per cent to 75 per cent through a three-year put and call option mechanism. The process of identifying other Sibur Holding plants to confer to a second joint venture continues as per last November’s MoU, the three parties report.