Bekaert takes on Pirelli steel cord business for €255 million
Pirelli & C. SpA has signed an agreement with Bekaert to sell 100 per cent of its steel cord activities to the Belgium-based steel wire company for an enterprise value of €255 million. At the same time, the two firms have entered into a long-term agreement for Bekaert to supply Pirelli with tyre cord. The deal is subject to regulatory approval and is expected to close in the second half of the year.
The sale encompasses all five Pirelli steel cord facilities, which are located in Figline Valdarno (Italy), Slatina (Romania), Izmit (Turkey), Yanzhou (China) and Sumarè (Brazil), and includes each site’s personnel and assets. Both companies state that they aim for a smooth transition process that enables a continuity of supply and service to Pirelli’s tyre manufacturing plants.
Commenting on the transaction, Pirelli said the sale will enable its exit from a business where it lacks competitive scale, freeing it to focus resources on its tyre activities; Bekaert, for its part, sees the integration of Pirelli’s steel cord activities and the long-term supply agreement a further enhancement of its status as an important supplier to the tyre industry.
In addition to the supply agreement, the two companies have also agreed to jointly develop products and enhance research and development activities; Pirelli says the aim of this is to ensure the transition to the new arrangement meshes smoothly with both Pirelli and Bekaert’s respective growth and development plans, making the most of existing assets, while also providing the basis for a gradual opening to the market.
Pirelli states that the cash-in and P&L impact related to this operation were not included in the forecasts provided in the industrial plan it presented to investors last November. Bekaert adds that the transaction is estimated to add approximately €300 million to its consolidated sales on an annual basis.