Cooper Tire & Rubber Co. is acquiring majority control of Shandong Chengshan Tire Co. Ltd.'s tire operations in Rongchen City, China, and will use it to introduce the Cooper brand into the Chinese marketplace.
Cooper is paying $70 million to gain 51-percent control of Shandong Chengshan's tire business, which will operate as Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Truck Tire Co. Ltd. Both will be based at Chengshan's single factory complex in Rongchen City in Shandong Province.
The deal is contingent on Chinese government and regulatory approval, Cooper said, which it expects to receive before year-end.
Shandong Chengshan is considered China's third-largest tire maker, with projected sales this year of $500 million, Cooper said. The company makes passenger and light truck radials as well as radial and bias commercial tires primarily under the brand names Chengshan and Austone and has an extensive domestic distribution system.
Cooper plans to start making Cooper-brand tires at the factory by as early as next year, a spokeswoman said, principally for sale in China. Some types and sizes may be exported, but the focus will be on the domestic market, where Shandong Chengshan serves both original equipment and replacement customers.
``This is another major step in our Asian strategy,'' said Thomas A. Dattilo, Cooper chairman, president and CEO.
``Chengshan is an excellent and profitable Chinese manufacturer that is already selling a significant number of tires around the world, and especially in China where Cooper has plans to have a leading market share position in the future,'' Dattilo said.
Cooper said it is too early to say what, if any, additional investments it might have to make to ensure the 29-year-old factory is up to its standards. Employment there is listed as 6,000 with annual capacity of 7 million units.
This is Findlay-based Cooper's third manufacturing venture in China. It already sources entry-level passenger and medium truck radials from Hangzhou Zhongce Rubber Co. Ltd. in Hangzhou and is a 50-50 partner with Taiwan's Kenda Rubber Industrial Co. Ltd. in a $200 million plant in Jiangsu Province, near Shanghai, that is scheduled to start up next year.
The deal with Chengshan Shandong also includes 25-percent ownership of a steel cord factory adjacent to the tire facility in Rongchen City.
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Cooper Tire in China
Cooper Chengshan (Shandong) Passenger Tire Co. Ltd.; Cooper Chengshan (Shandong) Truck Tire Co. Ltd. Plants to make passenger, light truck radials; radial, bias commercial tires. Awaiting government approval.
Hangzhou Zhongce Rubber Co. Ltd. Passenger, medium truck radials facility. Outsource agreement.
Joint venture with Taiwan's Kenda Rubber Industrial Co. Ltd. Passenger, light truck radial joint venture plant to open next year.