European Commission approves Bekaert acquisition of Pirelli steel cord business
The European Commission has approved the proposed acquisition of the steel tyre cord business of the Italian company Pirelli by its Belgian-based rival NV Bekaert SA under the EU Merger Regulation. According to an official statement dated 31 July, the commission concluded that the acquisition “would not raise competition concerns as the merged entity’s customers, which are large, multinational tyre companies, have countervailing buyer power which is further strengthened by over-capacity in the steel tyre cord market.”
In addition the Commission found that Bekaert will continue to face effective competition from a number of other strong competitors located outside the European Economic Area (EEA), in particular in Belarus, Korea and China.
The takeover was originally proposed on 27 February 2014, when NV Bekaert SA (based in Kortrijk, Belgium), announced that it had reached agreement with Pirelli Tyre SpA to purchase its steel tyre cord business.
Back then the two companies explained that the deal will see Bekaert enter into a long-term supply agreement of tyre cord to Pirelli. The acquisition agreement includes the purchase by Bekaert of Pirelli’s steel cord manufacturing sites in Figline Valdarno (Italy), Slatina (Romania), Izmit (Turkey), Yanzhou (China) and Sumarè (Brazil). The deal includes all of the personnel and assets of the respective entities.
Bekaert reported that the transaction is estimated to add approximately 300 million euros to Bekaert’s consolidated sales on an annual basis and that the deal has an enterprise value of 255 million euros.