Yokohama to acquire Alliance Tire
Tokyo: Japan
based Yokohama Rubber Company Limited (YRC) entered into an agreement to buy
Mumbai based Alliance Tire Group. The deal, which is valued at USD1.18 billion,
is expected to strengthen the OTR tire portfolio of YRC by enabling the company
to offer agriculture tire. The YRC has entered into the deal with KKR & Co.
L.P and the other concerned parties, in order to buy the shares of Alliance
tire. It is anticipated that the acquisition will be completed on July 1, 2016.
In April 2013, Alliance Tire has sold a
controlling stake to KKR & Co. L.P, which is a global investment firm.
Further, the founder of ATG tire, Yogesh Mahansaria held an ownership stake in
the company.
According to YRC, the Alliance Tire
registered USD529 million sales in the fiscal year 2015. Moreover, the company
managed to account an operating profit worth USD95 million in the same year.
The Indian OTR giant has strong manufacturing capability backed by its three
tire manufacturing capacities located in Israel, Tirunelveli and Dahej, India.
The manufacturing capacity of the company is also strengthened by contractual
production of ATG tires in Taiwan and China. Galaxy, Alliance and Primex are
the three brands of ATG tires.
The YRC manufactures and sells OTR tires, but
the company neither sells nor produces agriculture tires. Hence, purchasing ATG
tire is anticipated to foster Yokohama’s footprint into agriculture tire
market.
According to a recent report published by TechSci Research, “Japan Tyre Market
Forecast and Opportunities, 2020” Japan is home to four major tire companies -
Bridgestone Corporation, Sumitomo Rubber Industries, Toyo Tire & Rubber
Company, and Yokohama Rubber Company, all of which specialize in manufacturing
of tires for a variety of vehicles. Due to exceptional performance of these
companies at both domestic and global level, and development of new varieties
of tire, Japan tire industry is growing at a significant pace. The country also
hosts a number of large automobile manufacturers including Toyota, Honda,
Daihatsu, Nissan, Suzuki, Mazda, Mitsubishi, Subaru, Isuzu, Kawasaki, Yamaha,
and Mitsuoka.
As per TechSci Research, Japan tire market is
estimated to surpass USD26 billion in 2015. Growing demand for agriculture
tires would influence Japan tire market over the next few years. Moreover, the
recent step taken by Yokohama would not only lead to the expanding OTR
portfolio for the company but also result in a widen market share of Yokohama in
the Japan tire market as well as in the global agriculture tire market.