Michelin CGDEB (EU:ML)
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By Max Bernhard
Compagnie Generale des Etablissements Michelin (ML.FR) said Thursday that it is acquiring Canadian specialty-tire maker Camso for $1.45 billion in order to expand its position in the fast growing off-the-road market.
Michelin said it plans to merge the two companies' off-the-road operations into a new division, which will be managed from Camso's base in Quebec, Canada.
The transaction includes a $1.45 billion cash pay-out and $250 million in debt, corresponding to an enterprise value of $1.7 billion.
The company said it expects opportunities from the deal to increase sales and reduce costs, as well as potential synergies of $55 million by 2021.
Camso is a privately held company, which makes tires, tracks and track systems for construction and agricultural machinery, dirt bikes, snowmobiles and conveyor belts. It employs around 75,000 people in 26 countries.
Michelin's chief financial officer, Marc Henry, said the two operations were "absolutely complementary" with "not one product in competition."
"They are present where we aren't and vice versa," he said.
Mr. Henry said the new division could benefit from a recently formed joint venture with Sumitomo Corp. (SSUMY). In January, the two companies agreed to combine their replacement-tire distribution businesses in North America in order to strengthen their position in the U.S. and Mexico.
Michelin said it now expects synergies from its acquisition of Fenner PLC to be 60 million pounds ($79.4 million), double the initially announced GBP30 million.
Write to Max Bernhard at firstname.lastname@example.org; @mxbernhard
(END) Dow Jones Newswires
July 12, 2018 10:03 ET (14:03 GMT)
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