Yokohama: U.K. approves Trelleborg Wheel Systems acquisition

Yokohama Rubber Co. Ltd. has all the regulatory approvals it needs to finalize its purchase of Trelleborg Wheel Systems.

Early March 28, the United Kingdom's Competition and Market Authority gave the $2.3 billion deal its stamp of approval. The CMA approval was the last the two companies need to proceed with the sale, and it came just days after the European Commission cleared the transaction.

"As a result, the transaction now has been approved in all countries and regions that require prior approval based on the applicable antitrust laws," Yokohama said in a statement. "Yokohama Rubber will proceed with all remaining procedures necessary for completion of the share transfer, which is anticipated to take place in the first half of 2023."

CMA launched its antitrust investigation into the transaction late in January. Trelleborg A.B., at the time, called the procedure "normal."

"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 and Yokohama jointly announced the pending sale of Trelleborg Wheel Systems just over one year ago. And while the deal originally was expected to close in the latter half of 2022, the deal was delayed as both parties awaited outstanding regulatory approvals.

Upon completion of the sale in the months ahead, Yokohama has quite a bit to gain. The Tokyo-based tire maker will expand its agricultural tire footprint globally with TWS' well-rooted presence in Europe. It's a region the Japanese tire maker had yet to gain a foothold in.

With TWS under its auspices, Yokohama immediately gains strong sales and visibility as Europe accounts for almost 70 percent of Trelleborg Wheel Systems sales. And, aside from North America, the region is the second largest for TWS, accounting for 20 percent of sales.

The deal also marks a win for Trelleborg, which will see immediate profitability following the sale of TWS. Moreover, the move gives the Swedish firm much more agility within the markets where it feels it has significant room to grow. These markets include health care, medical, aerospace, green aviation, semiconductor business, e-mobility and sensor technology.

Leading into 2022, Trelleborg signaled that it intended to grow in these areas, both organically and through acquisition. And the company has been aggressive on the acquisition front, having previously identified more than 200 acquisition prospects.

The most notable is the $950 million acquisition of Minnesota Rubber & Plastics completed last year.

Trelleborg Wheel Systems operates 14 plants—four wheel manufacturing plants and 10 tire 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 and employs 150. It also has a facility in Charles City, Iowa. Production capacity was not immediately available.