FINDLAY, Ohio—Cooper Tire & Rubber Co. is buying a 65 percent stake in China's Qingdao Ge Rui Da Rubber Co. Ltd. (GRT) for about $93 million and plans to source its Roadmaster radial truck and bus tires from GRT's plant in Qingdao.
The deal is expected to close during the first half of 2016 pending certain permits and approvals by the Chinese government, Cooper said. The Chinese company was founded in 2014 by Qingdao Yiyuan Investment Co. Ltd., which purchased the assets of the then-idled facility.
The venture will be called Cooper Qingdao Tire Co. Ltd. once the deal closes, Cooper said. The transaction price covers the acquisition and initial investments in the operation.
At full capacity, Findlay-based Cooper estimates the factory will be capable of producing 2.5 million to 3 million radial truck tires annually. Cooper also said the venture may add passenger tires at some point, with an annual capacity similar to that for truck tires.
The company already produced car tires in China at its Cooper (Kunshan) Tire Co. Ltd. subsidiary in Kunshan.
“Cooper is excited to take this positive step to secure additional TBR tire supply and further our Asia growth strategy,” said Brad Hughes, Cooper chief operating officer. “After a comprehensive review of options, we are pleased to have reached this agreement, which meets our goal of finding a new source of high-quality, cost-competitive TBR tires for North America and Asia.
“As we have previously stated,” he added, “achieving our goals for growth will likely require a series of actions and today's announcement is certainly a significant one.”
Cooper sources its Roadmaster truck tires now from Prinx Chengshan (Shandong) Tire Co., its former joint venture manufacturing company with China's Chengshan Group Co. Ltd. The tire maker expects to source truck tires for Asia and other markets in addition to Roadmaster tires for North America.
In December 2014, Cooper Tire sold its 65 percent stake in its CCT joint venture to Chengshan Tire for about $262 million. CCT was a key sticking point in its failed merger attempt with Apollo Tyres Ltd. The joint venture failed to report financial information and refused to build any Cooper-branded tires.
The parties resolved their differences and eventually agreed to terminate the joint venture.
Located roughly 80 miles northwest of Qingdao City. GRT employs about 600 workers at a 1 million-sq.-ft. plant, Cooper said.
Chinese tire industry veteran Li Zhihua is the founder, executive director and general manager of Qingdao Yiyuan Investment (QYI). Cooper said, as well as a professor at Qingdao University of Science and Technology.
“After a lengthy evaluation process to identify the best partner, we are pleased to team up with Cooper, a global tire industry leader with a 100-year heritage of success,” Li said. “We look forward to working with Cooper to maximize the opportunity we have together to drive continued innovation and expand manufacturing of quality TBR tires and other products.”
QYI has put in place at GRT an experienced management team backed by a skilled work force with extensive tire industry expertise, with an initial focus on truck tires.
“The team at GRT is very impressive, with deep industry and technical knowledge,” said Roy Armes, Cooper chairman, CEO and president. “There's a strong workforce, facilities that we can continue to expand with further capital, and a management team that is focused on the current opportunity in TBR tires as well as our wider growth plans for Asia.
“This is a great strategic fit within our existing and highly productive worldwide manufacturing network and will allow us to further optimize our global footprint. We welcome the GRT team to the Cooper family and look forward to many years of success together in the future as CQT.”
CQT will become Cooper's eighth tire plant globally. Its others are in Findlay; Texarkana, Ark.; Tupelo, Miss.; Kunshan, China; Melksham, England; Krusevac, Serbia; and a joint venture plant near Guadalajara, Mexico.