AMSTERDAM—India's Apollo Tyres Ltd. has acquired Dutch tire maker Vredestein Banden B.V. from bankrupt Dutch-Russian holding company Amtel-Vredestein N.V. for an undisclosed sum.
The deal, initiated in November 2008 and approved early in May by a Dutch bankruptcy court judge, will add about $450 million to Apollo's annual sales and give the Gujarat, India-based tire maker a key entree to the European marketplace, where it up until now has distributed through independent distributors.
“This is a strategic alliance for us and will bolster Apollo's plans for its European customers,” said Onkar Kanwar, Apollo chairman and managing director. “The fit between the two companies spans the entire spectrum of R&D, products and people to manufacturing and markets. It is a synergistic match and our aim is to increase Vredestein's global value in the coming years.”
Vredestein's sole plant in Enschede, Netherlands, has the capacity to make for 5.5 million tires annually, roughly 70 percent of which are high-performance passenger tires. The majority of Vredestein's business is in Europe with the Vredestein and Maloya brands.
It is represented in the U.S. by Vredestein Tyres North America Inc. in Metuchen, N.J. Vredestein Tyres President Al Smoke said it's too early to say what, if any, effect the ownership change will have on the U.S. company. At some point in the future, he said, it is possible Vredestein Tyres might handle Apollo's line of tires in North America.
“This alliance is a win-win combination for both companies,” said Vredestein Banden CEO Rob Oudshoorn, who said the sale will bring a “desired level of stability” to Vredestein and its employees. “We will bring to Apollo our edge in passenger car tire technology alongside an understanding of the European market.”
At the same time, Oudshoorn said, “Apollo can offer us access to the non-European markets, valuable manufacturing expertise and assistance with bringing down costs by leveraging the purchasing power of a larger entity.”
Vredestein employs approximately 1,500 and has averaged an earnings/sales ratio of 8.5 percent over the past five years, Apollo said.
Vredestein Banden was bought by Amtel Vredestein in April 2005. It was able to keep itself afloat through Amtel-Vredestein's bankrutpcy by obtaining separate financing.
This is Apollo's second major acquisition in the past four years. In 2006 Apollo bought Dunlop South Africa and has since integrated its operations fully. Apollo reported fiscal 2009 sales of $1.07 billion.
“I have closely watched Apollo's acquisition and integration with Dunlop South Africa,” Oudshoorn said, “and the way they went about the merger speaks highly of the Apollo management's outlook on people and implementing best practices.”
Neeraj R. S. Kanwar, vice chairman and joint managing director of Apollo, said a comprehensive integration process will begin within the next month with particular focus on research and technology, products and brands, corporate purchases, and finance.
“We will continue to run Vredestein Banden under the leadership of the current Vredestein management,” he said. “As is our norm, the idea going forward is to ensure we leverage on each other's strengths for combined benefits and better products and services for our customers.”
Apollo said its plans to build a plant in Europe now are on hold pending further review. Apollo had pursued plans in 2008 to acquire land in Hungary for a plant, but local opposition and other factors prompted Apollo management to back off and consider other options.