YOUNGSTOWN, Ohio—Titan Tire Corp. expects to generate as much as $15 million in annual sales via its purchase of bankrupt Denman Tire L.L.C.'s assets, although the company probably will sell some of the acquired business.
Off-road tire and wheel specialist Titan made a successful, and surprise, bid on May 19 for most of the assets of Denman for $4.4 million. The action at a hearing at the U.S. Bankruptcy Court, Northern District of Ohio, Eastern Division, in Youngs-town ended attempts to revive the Ohio specialty tire maker.
Titan had shown no interest in Denman before the hearing. Denman filed for liquidation under Chapter 7 bankruptcy laws after failing to find other solutions to its financial situation. The remaining physical assets—the factory and manufacturing equipment—will be auctioned off later.
Titan plans to move the molds to its tire plant in Des Moines, Iowa, but the decision isn't final, said Titan Chairman Maurice Taylor Jr. He said the firm will consider divesting Denman's consumer tire-related assets because they don't fit particularly well with Titan's OTR-dominated product lines.
Likewise, Taylor said Titan has to evaluate its strategy concerning private branding. “If someone's going to pay us a fair price (for it), we'd have to consider it,” he said.
Taylor said he expects Titan initially can recover about a quarter of the $75 million in annual sales Denman had been generating in recent years. He singled out Denman's un- derground mining tire line as an example of products that are complementary to Titan's.
“We competed in a lot of Denman's product ar- eas,” Taylor said, “and we knew what the costs for molds, etc., for these lines should be.”
Taylor said most of Denman's customer base is independent distributors with built-in demand for a lot of Denman's niche products.
Titan had looked at Denman a few years ago, he said, so the company had a good idea of what the assets were worth. This time around, he said he felt some of the low-ball offers on the table made it seem someone “was trying to steal” the assets.
Being able to integrate portions of Denman's portfolio into Titan's plants will allow Titan to recoup its investment rather quickly, Taylor said, because Titan won't have any commitment to operate Denman's 91-year- old plant in Leavittsburg, Ohio, or deal with the displaced 260-person work force.
A portion of Denman's product portfolio overlaps with a number of product lines Titan used to make before it sold its original equipment consumer tire business in 2000 to Carlisle Tire & Wheel Corp., Taylor said.
One product line Titan isn't likely to continue making is antique/vintage tires, he said.
Titan's bid trumped other offers on the table, most notably one from GCA Tire L.L.C., an entity set up by Garden Club Angels of Youngstown L.L.C., and another bid by anti-que/vintage tire distributor Coker Tire Co. Inc.
GCA—which had hoped to resurrect Denman's Leavittsburg factory—offered $2.5 million for most of Denman's assets, while Coker earlier had bid $1.2 million for some of the assets, most notably the trade name, which Titan acquired.