MOSCOW—Amtel Group, which purchased Dutch tire maker Vredestein Banden N.V. earlier this year for $256 million, will start making Vredestein-brand tires at its own plants in Russia later this year to complement imports from Holland.
The acquisition will contribute significantly to Moscow-based Amtel´s becoming a pan-European company, said Amtel Chairman Sudhir Gupta.
Acquiring Vredestein provides Amtel access to technology and manufacturing expertise, European and North American distribution networks, a market-focused product mix and additional management and human resource capabilities, said Amtel CEO Alexei Gurin.
"Vredestein Banden will continue to focus on manufacturing high- and ultra-high-performance tires, as well as (research and development) and industrial design programs," said Vredestein Banden CEO Robert Oudshoorn. "The combination of Amtel and Vredestein Banden should provide employees with exciting opportunities to work in a wide area of different disciplines."
Amtel concluded the deal through its Amtel Holdings Holland N.V. subsidiary.
The addition of Vredestein will boost Amtel´s annual production capacity more than 50 percent to about 22 million tires at five plants—three in Russia and one each in Ukraine and the Netherlands.
Amtel also controls a carbon black and a chemical factory in Russia.
Amtel said it is planning to make 15,000 Vredestein-brand tires this year at its facility in Kirov, Russia, to supplement 30,000 Vredestein tires imported.
In 2006 this will increase to 200,000 imports and 1 million manufactured in Russia.
Vredestein´s Enschede, Netherlands, site has the capacity to produce about 5 million car, light truck, farm and industrial tires annually, while Amtel´s total production in 2004 was 14.4 million units, the company said.
Vredestein, an independent company since 1946, reported 2004 sales of $285 million. It is represented in North America by Vredestein Tyres North America in Metuchen, N.J.
In 2004 Amtel reported sales growth of 18 percent to $451 million and wrapped up a three-year, $200 million capacity enhancement program for its plants in Russia.
"2004 was another exceptional year for Amtel," Gupta said. "We significantly increased production capacity, sales, profits and market capitalization."
Gurin said the 21-percent production increase was because of the addition of the Amtel-Chernozemye I production line, in which Amtel invested more than $50 million in 2004.
Amtel claims its 2004 output gives it a 28-percent share in the Russian tire market, with 35 percent of the car/light truck sector—the most profitable market segment.
"In 2006, when construction is completed on the Amtel-Chernozemye II greenfield in Voronezh, total tire output companywide will reach 20 million tires per year," Gupta said.
Amtel´s Amtel-Povolzhye Kirov tire complex reached full capacity in 2004. This plant makes Fortio-brand tires under an off-take agreement for Bridgestone Corp.