GREENVILLE, S.C. — Cooper Tire & Rubber Co. will exit the retreading business in the coming months when it finalizes the sale of its Oliver Rubber Co. retread materials and equipment subsidiary to Michelin North America Inc. for a cash purchase price of $69 million.
"The decision is part of Cooper Tire´s ongoing efforts to focus on our core business and Michelin´s interest in growing their retreading business in North America," Findlay, Ohio-based Cooper said in a statement.
The deal was announced July 31 and is expected to close in late September. Oliver will become a subsidiary of Greenville-based Michelin to complement its Michelin Retread Technologies manufacturing and service network, adding about $100 million in sales to Michelin´s revenue base. Michelin said the addition of Oliver will enable it to "extend its reach in the growing commercial retreading market."
A Michelin spokesman said the tire company will operate the two retread operations and brands separately, although "eventually we expect synergies in production, sales and distribution of the two brands." Current Oliver licensees can expect the dealer network to continue operating "as they´ve been accustomed to," the spokesman said.
Oliver has 110 retreading licensees in the U.S., while Michelin has 41 licensed retreaders operating 77 plants, although on average the Michelin shops are larger than the Oliver-affiliated plants, according to available data.
The acquisition will strengthen Michelin´s position among the top three North American retread materials suppliers, alongside Bridgestone Americas Holding Inc. — which purchased market leader Bandag Inc. earlier this year-and Goodyear.
There are 345 franchised Bandag retreading plants in North America — including 26 operated by Bridgestone and 12 by Bandag — and 149 retreading plants aligned with Goodyear, including 59 operated by Goodyear.
The Oliver sale, which is subject to government approval, will include the Oliver precure and mold cure tread production plant and distribution center in Asheboro, N.C., and its equipment manufacturing plant in Salisbury, N.C. About 350 employees are affected. Michelin plans to continue running those operations, the spokesman said.
Oliver generates about $100 million in annual sales and is profitable, a Cooper spokeswoman said.
"Oliver´s manufacturing capacity, product portfolio and experienced work force are a terrific complement to Michelin´s current retread operation," said Luc Minguet, chief operating officer of Michelin Americas Truck Tire, in a joint statement. "We believe the two brands, managed according to Michelin´s strategic focus, will offer the North American trucking industry broader access to products and services to better meet their needs."
The Cooper spokeswoman said Oliver retreaders can expect "business as usual" until the deal is finalized. Cooper will be transitioning operations over the next couple of months in preparation for the hand-over to Michelin.
Cooper had acquired the Oliver operations when it bought Standard Products Inc. in 1999. At the time, Oliver generated sales of $160 million and supplied machinery, molds and tread rubber to about 250 retreaders.