Two of the world's largest tire and rubber product companies have purchased U.S.-based distributor firms aimed at boosting the aftermarket fortunes of various segments of their non-tire businesses.
Japan's Bridgestone Corp. is looking to increase its hydraulic hose presence in the U.S. as its newly formed subsidiary Bridgestone Hose America Inc. bought Masthead Industries L.L.C., which operates a network that specializes in hose sales and service.
For Germany's ContiTech A.G., the target was the U.S. automotive aftermarket with the purchase of a parts distributor. Its Power Transmission Group acquired all of the assets of Memphis, Tenn.-based Cadna Rubber Co. Inc.—a supplier of power transmission belts, hoses and metal components to retail and wholesale channels—for an undisclosed amount.
Bridgestone closed its acquisition June 30, and financial terms were not disclosed.
Masthead is based in Orange Park, Fla., and operates its sales and service stores under the HosePower name. It has 34 locations throughout the U.S. and one in Mexico, according to Bridgestone. Founded in 1990, Masthead employs about 400 and posted 2013 sales of $102 million.
There are some HosePower locations in Canada that are not owned by Masthead and are not included in the acquisition, according to a Bridgestone spokeswoman in Japan.
Bridgestone said the acquisition will enable it “to create value in hose operations by providing a timely supply of high-quality hoses to a wider range of customers while also offering support through specialized services.”
The agreement is a “natural evolution” as the companies have worked together since Masthead was launched, according to Bridgestone. Masthead's customers include end users, OEMs and those involved in mining activities.
Bridgestone began producing hoses in 1937 and now primarily deals in hydraulic hoses used in construction machinery and factories. It has eight manufacturing and assembly operations around the globe, including a Bridgestone Flowtech America hose assembly facility in the U.S. The company said it has no immediate plans to transfer the assembly unit to Bridgestone Hose America.
The firm said it plans to expand sales of replacement hoses while developing a mining solutions business.
Bridgestone plans to change the Masthead name to Bridgestone HosePower L.L.C., the Bridgestone spokeswoman said. The operation will continue to be based in Orange Park and J. Palmer Clarkson will remain as CEO.
“Bridgestone is aiming to expand replacement sales of hoses,” she said. “Currently Bridgestone does not have its own retail channels in the U.S. but sells the hose products through distributors. We expect to grow our hose business in the U.S. by taking in specialized knowledge and services of HosePower and enhancing collaboration between HosePower and Bridgestone.”
It expects stable demand of hoses in the U.S. as consumable parts used in various machinery and sees potential to expand its retail and service business through this acquisition, the spokeswoman said.
Bridgestone sees this deal as part of its “selection and concentration” initiative to enhance growth in some of its diversified products business. “We have already selected some key businesses and are working to grow and improve these segments by making synergy among them and promoting globalization,” she said.