Will a tyre major acquire ATG?

Indian financial daily The Economic Times reports that American private equity firm KKR & Co. L.P. has begun initial talks that may result in the sale of its 90 per cent share in off-highway tyre specialist Alliance Tire Group. The publication names Sumitomo, Continental and Michelin as potential buyers, however it notes that no confirmation of these firms’ interest has been given.

The Economic Times comments that ATG is said to be worth US$1.5 billion, and therefore such a transaction would represent the largest private equity exit from an Indian company ever. KKR confirmed its acquisition of a 90 per cent stake in ATG in April 2013; although the terms of the transaction were not disclosed, media sources at the time suggested the deal was worth $650 million, including an estimated $125 million in debt.

If the sale of this majority ATG shareholding goes through and the company comes under the control of another tyre maker, the deal would be the third round of consolidation within the global agricultural tyre market to take place in recent months. Towards the end of last year, Titan International acquired the license to produce Goodyear-brand agricultural tyres in Europe, the Middle East, Africa, Russia and the CIS, and Trelleborg purchased CGS Holding, parent company of Mitas.

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