CLERMONT-FERRAND, France—Michelin is selling its Camso brand and a package of off-road tire-manufacturing assets in Sri Lanka to India's Ceat Ltd. for roughly $225 million.
The sale includes a bias-ply tire plant and rubber track plant in Colombo, Sri Lanka, that Michelin has operated since its $1.45 billion acquisition in 2018 of off-road tire and wheel specialist company Camso Ltd.
The deal is subject to regulatory approvals from the relevant authorities and is valued at an EBITDA multiple of 4.6 (adjusted EBITDA 2023), Michelin said, and calls for Ceat to license the Camso brand for three years before taking control.
Ceat called the acquisition a "significant milestone" in its ambition to become a leading global player in the high margin off-highway tire segment. Ceat—the No. 23 tire maker worldwide based on fiscal 2023 sales of $1.42 billion — estimates the sales value of the business being acquired at $213 million annually
"This acquisition has significant strategic consequence for Ceat as it catalyzes the company's journey towards being a leading tire maker globally," Anant Goenka, vice chairman, RPG Enterprises (Ceat 's parent company), said.
"Camso is an industry-leading brand in the off-highway tire market built through many years of investment in creating product superiority and manufacturing excellence, nurtured through the Michelin parentage. Most importantly, we found a great cultural alignment between Camso and Ceat because of our total quality management way of working."
Michelin did not comment on the possible impact of this decision on other Camso assets including tire plants in Argentina, Brazil, China, the U.S., and Vietnam and four research and development centers.
Michelin will phase out activities related to compact line bias tires and construction tracks, Ceat said. Separately, Michelin said it will phase out the production of bias-ply off-highway tires at its plant in Olsztyn, Poland, and focus going forward on radial tires in the off-highway markets in which it competes.
Michelin said the divestiture is aligned with its "Michelin in Motion 2030" sustainable-growth strategy, which focuses the firm's efforts where its innovations and technologies "are the most valued."
Ceat said acquiring the Camso brand and assets gives it the ability to widen its product base into tracks and construction tires as well as access to a global customer base that includes 40-plus international original equipment customers and premium international distributors active in the off-highway sector.
"The Camso brand is an excellent fit with the growth strategy of Ceat 's off-highway tire business, thereby improving our margin profile," Ceat Managing Director and CEO Arnab Banerjee said.
"Access to the most premium customers, a high-quality brand and a qualified global work force is what excites us the most about this acquisition. The track segment is a technologically superior segment with a limited number of global players.
"We also found high synergies between the two brands, Ceat and Camso, and are confident that both will benefit tremendously from their complementary capabilities and positioning."
In Sri Lanka Ceat is acquiring two "state-of-the-art" factories, one for bias-ply tires and tracks and one for "cast" products.
Nour Bouhassoun, senior vice president, Beyond Road Business Line at Michelin, said "Michelin firmly believes that Ceat is the right fit to carry on our bias tires and tracks for compact construction-equipment business.
"Both our companies are fully committed to ensuring a smooth transition for our employees and business continuity for our customers and suppliers. With this operation, Michelin is continuing to reshape its Beyond Road business, in line with the group's sustainable growth strategy."
Michelin said this transaction will help strengthen the financial performance of its specialty tire business unit. The assets being divested account for around 3 percent of net sales of its other tires (farm, OTR, aircraft, motorcycle, etc.) and non-tire business unit, generating profitability well below the unit's average.
Ceat recently disclosed plans to start selling a range of radial truck/bus tires in North America, starting with iterations tailored for regional and urban applications, and management indicated during the firm's half-year financial results conference call that the firm is considering adding passenger tires to the mix as well.
