MOSCOW (June 30, 2008) – The boards of directors of Sibur Holding J.S.C. and Amtel-Vredestein N.V. have agreed to merge their tire businesses.
Sibur Holding will gain eventual management control of the merged operation in a complex purchase and new share issuance transaction.
If the deal proceeds as planned, Sibur Holding will own 70 percent of the enlarged group as a result of the acquisition alone and not less than 60.5 percent of Amtel-Vredestein's enlarged share capital as a result of the acquisition and new share placement, the companies said.
The parties said they expect Vadim Gurinov of Sibur Russian Tyres will be appointed chief executive of Amtel-Vredestein once the deal is completed.
Based on their 2007 fiscal performances, the merged entity would generate up to $1.8 billion in sales from tires produced at six plants in Russia and one in the Netherlands and from the two firms' respective distribution holdings in Russia. Together the companies have more than 31,000 employees.
As part of the deal, new funds of up to $190 million will become available, $40 million in two equal tranches from Sibur Russian Tyres as working capital and a further $150 million through the issue of new shares, the companies said. The new funds will be used as development capital to ensure production can be modernized and factories can be completed. SRT will provide some or all of this funding.
Amtel-Vredestein will buy Sibur Russian Tyres, valued at nearly $320 million, from Sibur Holding by issuing 159.3 million new Amtel-Vredestein shares in Sibur's name. At the same time, Amtel-Vredestein will attempt to raise $150 million in new capital by selling 79 million Amtel-Vredestein shares in the open market. Sibur Holding has committed to buying $50 million worth of these shares.
The end effect of the share swap and sell will be Sibur's owning majority control of the merged operation.