Shandong Yongtai, Treadsetters buy Covpress
China’s Shandong Yongtai Chemical Group, manufacturer of the Durun tyre brand and the DMack tyres used in the World Rally Championship, and UK tyre wholesaler Treadsetters have jointly acquired automotive supplier Covpress. The two companies are believed to have paid £30 million to buy the Coventry-based firm, which employs around 450 people and manufactures body panels for vehicle manufacturers such as Jaguar Land Rover, Nissan and Renault. Chinese and UK media sources report Shandong Yongtai will hold a 70 per cent stake in Covpress and TIA Group company Treadsetters the remaining 30 per cent.
On 25 July, the Birmingham Post quoted Shandong Yongtai managing director You Xiaoming as saying the Covpress acquisition would help spearhead his company’s new drive into European and other global markets. “Yongtai is a leading tyre manufacturer in Shandong province and we sell to 30 countries all over the world, including the World Rally Championship…We are the equivalent of Michelin in China.
“We believe this is two strong companies joining together in a win-win situation. Because we are strong in auto components, this acquisition will be an ideal complement to our existing product portfolio and we believe Covpress will be an excellent partner,” the managing director added. “Our plans are to grow our business through increasing our international profile and penetration into European and other world markets. The acquisition of Covpress is an important move for us in our overall strategy.”
Treadsetters chairman Peter Smith told the Birmingham post that acquisition negotiations have been underway for some 14 months. “They are a major tyre supplier to us and they want to distribute their Durun brand. This is a massive sea-change for Covpress. It will help cement relationships for our customers GM and JLR and create further opportunities in China,” said Smith. “Business analysts and politicians are always talking about the need for inward investment and this is a shining example. Our Chinese partners were looking for a link with Coventry’s legendary history in the automotive sector and this alliance fits the bill to a T.
“The involvement of TIA means that Covpress remains essentially a British company,” the Treadsetters chairman added. “We can take advantage of investment from the fastest growing economy in the world and our Chinese colleagues will learn from the rich automotive expertise here in the West Midlands.”
The deal is said to have received financial backing from ABN Amro and Chinese bank BOCOM, and was brokered by Transcend Corporate with UK legal advice provided by Squire Sanders. Financial due diligence was carried out by PwC, with sellers advised by KPMG and Gateley.