Apollo Tyres says yes to Eastern Europe, Asia, and no to China
It appears to be a case of once bitten, twice shy for Apollo Tyres. Following its experience with Cooper Tire & Rubber, and particularly its joint venture subsidiary Cooper Chengshan, the Indian tyre maker seems ready to give China a wide berth for the time being.
In its official statement on Cooper’s 30 December termination of the acquisition deal, Apollo commented on Cooper’s “lack of control” over the Cooper Chengshan operation. The company’s vice-chairman and managing director went further when speaking with The Financial Times. The publication quotes Neeraj Kanwar, after learning more about what went on behind the scenes during the acquisition negotiations, as saying: “It has really given me, as an investor, an eye-opener. And now, I do not want to get in to China.”
Kanwar confirmed the statement’s assertion that “Apollo has many other compelling growth opportunities around the world that we are continuing to pursue”, declaring that the company is “back into looking at greenfield sites.”
Apollo spoke of its interest in Eastern Europe during the early stages of its negotiations with Cooper, when it was still confident the US$2.5 billion transaction would transform it into the world’s seventh-largest tyre maker (in terms of revenue). The company intended to invest in the former Trayal factory in Kruševac, Serbia, which Cooper acquired at the start of 2012. Now the talk is of investing up to $500 million in a brand new plant – Hungary has been indentified as a potential location – that will supply Europe and the CIS region, as well as a greenfield facility in Southeast Asia. Kanwar told The Financial Times that a final decision on building these plants will be taken in the next few months.