Report: KKR buying 90% of Alliance Tire Group
India’s Economic Times reports that private equity firm Kohlberg Kravis Roberts (KKR) has agreed to buy a 90 per cent stake in Alliance Tire Group. The deal for a reported US$650 million includes an estimated $125 million in debt.
If correct, the news suggests brings speculation of such a sale, to a company such as KKR – which has been seen as the front runner for some time – to a conclusion. However both the size and the value of the purchase may come as a surprise to some. With the new owner once again being private equity and therefore mid-term return driven it is also likely to raise questions about the the tyre company’s medium term strategy.
Alliance Tire is owned by private equity company Warburg Pincus and Yogesh Mahansaria, and is headquartered in India.
The report said that Warburg Pincus bought an 80 per cent stake in the then-Hadera, Israel-based Alliance Tire Co. in 2007 for some $150 million. Mahansaria, former CEO of Balkrishna Tyres, bought the remaining 20 per cent, and assumed operational management of the company.
Under the deal with KKR, the report said, Warburg Pincus is selling its entire stake, while Mahansaria will sell half of his stake to KKR.