THANE, India (Feb. 1, 2010)—Alliance Tire Group's purchase in December of most of GPX International Inc.'s global distribution assets will provide more value to its customers, according to the firm's CEO.
Yogesh Mahansaria said the $54 million purchase will boost Alliance's sales by about $100 million in its first year, with more than 75 percent generated in North America. The acquisition gave Alliance worldwide rights to the Galaxy and Primex brands; the U.S. and South African sales operations; U.S. customer relationships; warehouse footprint; and medium radial truck tire distribution business in the U.S.
The Galaxy off-the-road and Primex industrial tire lines are almost entirely complementary to Alliance's farm and forestry tire portfolio, Mahansaria said. That creates considerable opportunity for Alliance's existing customers to consider those brands and the new customers to consider the Alliance brands.
About 95 percent of the 1,200 former GPX customer accounts in the U.S. are new to Alliance, he added.
Alliance plans to handle the expanded portfolio by using its own plants in Israel and India along with a number of contracted manufacturers in China, Mahansaria said.
Some of the Galaxy types and sizes could be produced at Alliance's plants, but for now production will continue at the Chinese producers, which have much lower U.S. import duty levels than GPX's Hebei Starbright Tire Co. plant in China, he said.
The acquisition also strengthens Alliance's original equipment position, both in North America and globally, he said. GPX had OE fitments with the Galaxy brand on agricultural equipment models by Caterpillar, John Deere, Case New Holland, Volvo and others.
Alliance's revenue base in North America will be aided by the exclusive distribution agreement for the Aeolus radial truck tire brand, he said. Although this business is outside of Alliance's traditional business model, Alliance sees it as a solid revenue and profit generator.