MOSCOW—Titan International Inc., together with two equity/investment firms, have agreed to invest an as-yet undisclosed sum in Voltyre-Prom, a Ekaterinburg, Russia-based agricultural and industrial tire maker, to take a controlling stake in the firm.
The offer, put forth by a consortium involving Russian Direct Investment Fund, Titan and One Equity Partners, involves an "agreement in principle" with Russia's JSC Cordiant—the manufacturing venture previously known as OAO Sibur Russian Tyres—to invest in Voltyre-Prom.
The transaction is expected to be finalized in the near future.
Titan will become the managing partner of Voltyre-Prom, according to a statement released by the consortium June 19 in Moscow. The consortium's investment will allow Voltyre-Prom to update its operations, grow its production of specialty tires for international agricultural machinery, reduce imports by shifting production to Russia and begin to explore export opportunities, the statement said.
"Titan has plans to grow its tire, wheel and track footprint in Russia and CIS countries," said Maurice Taylor Jr., Titan chairman and CEO, referring to the nations of the Confederation of Independent States.
"International, John Deere, CNH, Agco and Caterpillar are just a few of Titan's customers increasing their presence in Russia and CIS," Taylor said, "and Titan will be there to service them and end users of their equipment as this expansion occurs.
"It is Titan's belief that the future growth of global farming and mining lies in Russia and CIS countries."
The consortium's statement describes Voltyre-Prom as the leading producer of agricultural and industrial tires in Russia, with a market share in agricultural tires of 43 percent and in industrial tires of 16 percent in 2012. It sells farm and off-the-road tires under the Tyrex brand name.
The company produced about 1.35 million tires in 2012.
Cordiant CEO Dmitry Sokov said the agreement will enable Cordiant to focus on passenger and truck tire markets and includes a three-year distribution partnership, calling for Cordiant to sell Voltyre's passenger, truck and light truck tires.