EU approves Yokohoma's Trelleborg Wheel Systems purchase

Yokohama Rubber Co. Ltd. is just one approval away from finalizing its purchase of Trelleborg Wheel systems.

The $2.3 billion deal received the European Commission's stamp of approval late March 24, according to both Trelleborg A.B. and Yokohama. The two companies shared the news in nearly identical press releases, noting that the sale is expected to be complete in the first half of 2023.

The European Commission has yet to publish its decision.

And while the approval is good news for both Yokohama and Trelleborg, there remains at least one hurdle to clear. Both parties are still waiting on the results of an antitrust investigation launched by the United Kingdom's Competition and Market Authority in January.

"The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act of 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services," CMA said in a Jan. 31 statement.

Trelleborg, at the time of the investigation's launch, said the scrutiny was expected as part of a "normal procedure."

The sale of Trelleborg Wheel Systems, first announced nearly one year ago, originally was expected to close by the end of 2022, but delays in regulatory approvals hindered the timeline.

Once finalized, though, the deal would be a boon to Yokohama, which looks to expand its ag tire footprint, particularly in Europe where it has not yet established a strong presence. The move would be significant in terms of sales and visibility, Yokohama said, noting that Europe accounts for almost 70 percent of Trelleborg Wheel Systems sales.

Its second largest region—North America—accounts for about 20 percent of sales.

Trelleborg Wheel Systems operates 14 plants worldwide, including seven in Europe, three of which are located in the Czech Republic, according to Yokohama. Those three Czech sites, which manufacture the company's Mitas-brand products, employ about 2,300 and have a total capacity of around 89,000 units per year, according to Rubber News' most recent Global Tire data.

Other Trelleborg-owned European plants are located in Latvia, Serbia, Slovenia and Italy. Trelleborg's largest European tire plant is in Serbia, where it has capacity for around 25,000 tires per day.

In the U.S., TWS operates a facility in Spartanburg, N.C., that was opened in 2015. The factory employs 150, but production capacity wasn't available.

For its part, Trelleborg said when the deal was first announced that divesting TWS will help the Swedish firm improve its profitability and make its overall business less cyclical. TWS accounted for 30 percent of group sales, but contributed just 22 percent of EBIT, according to Trelleborg.