Trelleborg begins growth spurt

STOCKHOLM—Trelleborg Wheel Systems should experience significant growth in the next year, thanks principally to the addition of tire maker Mitas a.s. and two acquisitions it made last year.

Trelleborg Wheel Systems' parent, Stockholm-headquartered Trelleborg A.B., purchased CGS Holding a.s. and its three businesses—Mitas, Rubena a.s. and Savatech d.o.o.—in a deal that closed May 31, for about $1.25 billion.

Trelleborg actually received approval to close the deal on May 10 from the European Union, the last it needed from regulatory agencies. However, a company official said, the firm held off finalizing the sale in order to complete more buyer-seller aspects of the transaction.

It is the largest acquisition Trelleborg has made since it purchased Polymer Sealing Solutions, which eventually became Trelleborg Sealing Solutions, in 2003, a Trelleborg spokeswoman said.

Headquartered in the Czech Republic, Mitas is a leading global manufacturer of agricultural, industrial and specialty tires. The spokeswoman said it accounts for about two thirds of CGS' sales and has strong mid-market specialty tire brands with a particularly solid position in agricultural tires.

It will become integrated into Trelleborg Wheel Systems, while Rubena and Sava-tech will remain stand-alone operations during a transition period, according to the spokeswoman, and over time they will become part of other Trelleborg businesses.

Mitas' major markets are in Western, Eastern and Central Europe, she said, where it has a production operation that complements Trelleborg's own manufacturing structure, particularly in the Central European markets.

In addition, the spokeswoman said, “we are gaining a new agricultural tire facility in the U.S. that complements our newly opened facility in the country.” That gives Trelleborg the most modern manufacturing operation for ag tires in the largest agricultural market in the world, she added.

Peter Nilsson, president and CEO of Trelleborg, said completing the purchase means Trelleborg Wheel Systems “will almost double its sales in agricultural tires, strengthen its leading position in industrial tires and add new positions in complementary specialty tire segments.”

Mitas also will broaden its geographical reach and add new positions of strength in complementary tire niches, he noted.

Rubena and Savatech develop and manufacture a broad range of engineered polymer products, including seals, sealing profiles, specialty molded goods, offset printing blankets and engineered fabrics.

Nilsson said overall the addition of the CGS group of businesses helps strengthen Trelleborg's existing positions in several of the segments the group serves.

CGS and its subsidiaries operate 13 manufacturing plants, 11 in Central and Eastern Europe, its new plant in the U.S., and another in Mexico. CGS and its operating companies had sales in the $660 million range for the 12-month period ending June 30, 2015.

Trelleborg Wheel Systems has experienced significant growth, primarily through acquisitions, in the last year.

In late 2015, the business opened its first North American tire manufacturing plant by converting a 430,000-sq.-ft. facility in Spartanburg, S.C., to radial agriculture tire production. The Trelleborg complex formerly produced coated fabrics.

It spent about $50 million on the multi-phase project, with plans to add more tire building equipment at the site over the next few years.

Pointing out that North America is the largest agricultural market in the world, Paolo Pompei, president of agricultural and forestry tires at Trelleborg Wheel Systems, said demand for extra-large agricultural tires is growing in the region. “Local production offers considerably more favorable conditions, thus enhancing our competitiveness,” he said.

In December 2015, Trelleborg Wheel Systems expanded further by acquiring Standard Tyres Group, a privately held Brazilian industrial tire manufacturer, to bolster its presence in South America.

Trelleborg said this purchase is part of its strategy to strengthen its position in attractive market segments. The acquired company's strength is in solid forklift tires, but it also offers pneumatic tires for material handling, construction, mining and earthmoving.

Standard Tyres primarily will focus on the production of material handling tires for original equipment manufacturers.

In April 2015, the business also acquired Armstrong Tyres, an Australian agricultural tire service and distribution company. And two months prior to that transaction, the firm purchased industrial tire distributor D.G. Manutention Services S.A.S to help expand its base in France.