Michelin buys Indonesian tyre manufacturer Multistrada
Michelin has agreed to buy 80 per cent of PT Multistrada Arah Sarana TBK, the Indonesia-based tyre manufacturer. With a production capacity of more than 180 thousand tons (which equates to 11 million passenger car tyres, 9 million two-wheel tyres and 250 thousand truck tyres), Multistrada generated net sales of US$281 million in 2017.
Michelin says the acquisition will “strengthen its presence in the highly promising but local-production dominated Indonesian market” by acquiring the “very competitive local plant with good quality facilities and immediately available production capacity”.
Moving forward – and with only a limited investment – Michelin will now gradually convert production from Tier 3 passenger car tyres to Tier 2 Michelin Group brands, thereby allowing more Tier 1 production at other Asian plants and supporting growth of demand of Tier 2 volumes in Europe, North America and Asia.
In addition, through the transaction Michelin will acquire a 20 per cent stake in the retailer PT Penta Artha Impressi (Penta) in partnership with Indomobil and private investors in a move designed to boost the marketing and sales of Michelin Group brands in Indonesia.
Jean-Dominique Senard, chief executive officer of the Michelin Group, said: “The acquisition of Multistrada represents an excellent opportunity for Michelin to expand its operations in Indonesia, the most populous country in Southeast Asia, and immediately gain competitive, good-quality production capacity without having to create any new manufacturing facilities.”
Pieter Tanuri, CEO of Multistrada, said: ”We are very proud of what we achieved with Multistrada and we are confident Michelin is the ideal partner to take Multistrada forward into a new era of growth and success for the benefit of all stakeholders and employees.”
Potential synergies in manufacturing, sales and purchasing are expected to represent up to $70 million per year within 3 years of the acquisition. Multistrada, including the 20 per cent stake in Penta and 50 hectares of available land, has been valued at $700 million enterprise value, representing 6.3 times EBITDA for the 12 months ended 30 September 2018, after expected synergies.
Upon closing, Michelin will pay $439 million for 80 per cent of the Multistrada shares subject to certain closing adjustments. As Multistrada is a publicly listed company, and pursuant to Indonesian regulations, Michelin will subsequently launch a public offer for the remaining outstanding shares, at the same price per share as that offered to the 80 per cent shareholder group. The acquisition will be funded from internal financial resources.