Cooper enters agreement to acquire Trayal assets
Cooper Tire & Rubber has announced its entry into an agreement to acquire the assets of an existing tyre plant in Kruševac, Serbia. Although Cooper’s statement on the deal did not name the Serbian company, the tyre maker’s interest in investing into Kruševac-based firm Trayal has been known since mid-2011. The agreement to acquire Trayal’s passenger car tyre business was signed on 8 December by Hal Miller, president of Cooper's International Tire Segment, and Serbia’s minister of Economy, Nebojša Ćirić.
The Trayal facility is located some 200 kilometres south of the Serbian capital, Belgrade, in a location Cooper describes as providing “an excellent location to supply tyres to the European and Russian markets.” The new wholly-owned subsidiary will be known as Cooper Tire Serbia and will complement Cooper’s existing European operations and products, including the high performance tyres manufactured in its Melksham plant. Cooper says the Serbian firm’s acquisition is “a logical next step in the high quality, cost-effective manufacturing footprint underpinning Cooper’s strategy of profitable top-line growth.”
Including an initial investment of approximately 13 million euros and with the Serbian government supporting the project in several ways, Cooper plans to invest more than 50 million euros in the operations over the next three years. Support from the Serbian government could total a possible 10 million euros if certain goals are achieved, the tyre maker adds. Hall Miller is reported as saying annual output will increase from its current level of 500,000 tyres per annum to 3 million units by the end of quarter one, 2012.
“The Serbian government is very supportive of this transaction and promoted the benefits of the location, the labour force and the competiveness in the region,” commented Miller. “As a global tyre company, developing this well-situated source of quality supply will benefit customers, employees and our shareholders. We are extremely excited about the momentum we are building and the role this operation will play in our future.”
In addressing the timetable for the new operations, Julian Baldwin, vice-president and managing director of Cooper European Operations, commented: “We look forward to working with the experienced local work force in preparing to produce tyres in Krusevac. The plant will initially employ 400, with plans to grow to a production capacity of three million tyres with 600 to 700 employees within three years. There is room for even greater capacity with further investment in the business.”
It is only a couple of years since the Trayal production lines stood still for several months and workers went on strike over unpaid wages; the tyre maker’s privatisation and sale to Bulgarian power supplier Brikel EAD in 2006 delivered mixed results. Brikel retains a majority shareholding in Trayal’s truck and bicycle tyre making business. Serbia’s government has also taken a 24 per cent share in the company after agreeing to convert what Brikel owes in unpaid taxes into equity.
The transaction is expected to close during the first quarter of 2012 and is subject to regulatory approvals, confirmatory due diligence and other conditions.