"Reshaping the Tire Landscape: Major M&A Events in the Global Tire Industry in 2024"

In the development history of global tires, many tire companies have merged and many tire companies have split. As the saying goes, long-term unity will inevitably lead to division, and long-term division will inevitably lead to unity. In order to rapidly grow or expand business in other fields, tire giants usually acquire mature companies in this field. This is also a condition for tire giants to maintain their leading position in various fields. Today, let's take stock of the major mergers and acquisitions of domestic and foreign tire giants.

1. Titan International acquires Carlstar Group
In March 2024, Titan International announced a major acquisition, acquiring Carlstar Group L.L.C., a manufacturer of specialty tires, wheels and outdoor equipment. The total transaction amount reached US$296 million (approximately RMB 2.13 billion). One of the tire factories is located in Meizhou City, Guangdong Province, China (Carlisle Tire Factory). Its products include all-terrain tires, lawn mower tires, golf cart tires, and trailer tires. In addition, the company also provides tires for equipment such as excavators and loaders.

In 2023, the company's total revenue was approximately $615 million and its operating profit was $73 million. Paul Reitz, president of Titan Tire, said it was a transformative deal. The acquisition of Carlsda expanded its manufacturing and distribution capabilities and further enriched its product portfolio.

2. Nova Motorsport acquires Companhia (CNB-Camac)
In April 2024, the newly established British tire company Nova Motorsport acquired Portuguese tire manufacturer Companhia Nacional de Borracha USA (CNB-Camac) as part of its plan to become a fully competitive tire supplier.

Just six weeks earlier, Nova Motorsport acquired the assets of Avon Motorsport and Avon Racing from Goodyear, but did not disclose its financial details. The Westbury-based company said the acquisition marked a "significant expansion of Nova Motorsport's capabilities and influence in the professional and racing tire industry."

Companhia (CNB-Camac) is headquartered in Palmela, Portugal, and has a production capacity of more than 500,000 tires per year. The company is considered a key player in the professional tire market, including the racing industry. The acquisition marks another key step for Nova Motorsport towards becoming an independent supplier of high-performance racing and professional tires.

3. Yokohama acquires Goodyear's off-road business
In July 2024, Goodyear Tire & Rubber Company (Goodyear) announced that it had signed a definitive agreement to sell its off-road ("OTR") tire business to Japanese tire production company Yokohama for US$905 million.

Goodyear's OTR tire business provides industry-leading OTR tires for open-pit and underground mining, construction and quarrying, as well as port and industrial terminal markets around the world. Goodyear OTR provides a full range of trusted products, services and tire management solutions to help customers optimize operations and improve productivity and efficiency.

Goodyear will continue to provide OTR tires for US military and defense applications. Under a product supply agreement signed with Yokohama related to the completion of the transaction, Goodyear will produce certain OTR tires for Yokohama at some of its production sites within the first five years after the completion of the transaction. The transaction is subject to regulatory approval, other customary closing conditions and consultation, and is expected to be completed in early 2025. Goodyear intends to use the proceeds from the transaction to reduce leverage and fund plans related to Goodyear's forward transformation plan.

4. Qingdao Doublestar reorganizes Kumho Tire's equity
On September 24, 2024, Qingdao Doublestar announced a transaction plan to reorganize Kumho Tire's equity, and finally determined to reorganize Kumho Tire's equity at 4.927 billion yuan. After the transaction is completed, Kumho Tire will become a holding subsidiary of Qingdao Doublestar. At the same time, the controlling shareholder Doublestar Group and Chengtou Venture Capital have made commitments to Kumho Tire's performance in the next four years, showing confidence in the future development of Kumho Tire. According to 2023 data, Qingdao Doublestar's operating income is about 4.7 billion yuan, Kumho Tire's operating income is about 21.9 billion yuan, and the reorganized Qingdao Doublestar's operating income will exceed 26 billion yuan.

Since the beginning of this year, the merger and reorganization market of listed companies has continued to heat up, and the China Securities Regulatory Commission has also continued to optimize the policy environment for restructuring. On September 12, Wu Qing, Chairman of the China Securities Regulatory Commission, said that the China Securities Regulatory Commission will further comprehensively deepen capital market reform, continuously improve the quality and investment value of listed companies, give full play to the functions of the multi-level capital market system, support enterprises to grow through equity and debt financing, futures risk management and other channels, and take multiple measures to activate the M&A and restructuring market. Doublestar's major asset restructuring has undoubtedly stepped on the timing of capital policy.

5. Hankook acquires Hanon
In November 2024, Hankook Tire Technology announced an agreement with a private equity fund to acquire 23% of Hanon Systems, a global leading provider of automotive thermal management solutions, for 1.23 trillion won (about 6.3 billion yuan). According to the share purchase agreement signed by both parties, Hankook Tire will purchase 122,774,000 shares at a price of 10,000 won per share, thereby increasing its shareholding in Hanon Systems to 54.77%.

Founded in 1983, Hanon Systems focuses on providing comprehensive thermal management solutions for automakers. Its products and services cover air conditioning systems, powertrain cooling, compressors, fluid delivery systems, electronic components and fluid pressure control.

6. SEAT acquires Camso, a subsidiary of Michelin
In December 2024, Michelin Group sold its Camso brand and a series of off-road tire manufacturing assets in Sri Lanka to CEAT Limited of India for approximately US$225 million. The sale includes a double-layer tire plant and rubber track plant in Sri Lanka, which Michelin has been operating since it acquired Camso Limited, an off-road tire and wheel expert, for US$1.45 billion in 2018.

Michelin said the asset divestiture is in line with its "Michelin Dynamic 2030" sustainable growth strategy, which focuses the company's efforts on where its innovation and technology are "most valued." CEAT said the acquisition of the Camso brand and assets enables it to expand its product base to track and construction tires and gain a global customer base, including more than 40 international original equipment customers and senior international distributors active in the off-highway industry.

The acquisition of tire companies determines the development of themselves and the industry in the next few decades. The aftermath of some major acquisitions of tire companies in the past is still affecting the tire industry.

1. Goodyear's acquisition of Cooper
Goodyear and Cooper are both world-renowned tire manufacturers. In 2021, Goodyear Tire & Rubber Company announced that it had officially completed the acquisition of Cooper Tire & Rubber Company. This acquisition will integrate the advantages of the two excellent tire manufacturers in product portfolio, service and production capacity, thereby consolidating Goodyear's leadership in the global tire industry. The merged company will provide a full range of product matrices, which will benefit customers and consumers and make it easier and more convenient to purchase Goodyear and Cooper brand tire products.

The acquisition of Cooper is undoubtedly a reassurance for Goodyear, allowing it to stabilize its position and still sit firmly on the throne of the world's third and the United States' first. It is true that the acquisition of Cooper has greatly increased Goodyear's strength, but whether the integration of resources and the combination of the two strong forces can achieve the effect of 1+1>2 will test Goodyear's long-term operating ability.

2. Yokohama acquires Trelleborg Wheels
Yokohama said: Due to the emergence of autonomous driving and mobile services, the number of personal cars is expected to decrease, while the number of vehicles related to the infrastructure used to transport people and goods will increase. In the statement, Yokohama emphasized that the purpose of this major acquisition is to expand its off-road tire business capabilities and further enhance the market competitiveness of tire companies. At present, Yokohama Tire's business is more inclined to passenger car tires, so the tire business and market sales composition ratio have not been adjusted. Stabilizing the business and expanding profits, the growth of stable and high-profit off-road tire production and sales is set as an important topic.

3. Zhongce Rubber Acquires Tianjin Guolian
In April 2022, Zhongce Group and Tianjin International United Tire and Rubber Co., Ltd. established a new Zhongce (Tianjin) Company after mixed reform. In the next three years, the new company plans to invest 2.8 billion yuan. By then, the company is expected to become one of the top three in the world and the largest off-road tire production plant in Asia.

According to public information, Tianjin International United Tire & Rubber Co., Ltd. was established in 1988 and is one of the few manufacturers in the world that can professionally produce a full range of engineering machinery tires and special tires. Its Tianli brand was founded in 1988 and has been focusing on the production of off-road tire products for decades. It now has a complete sales and service network and is sold in more than 70 countries around the world.

After the mixed reform in 2022, relying on the industry advantage of Zhongce Tire, the newly established Zhongce (Tianjin) Company has begun to provide supporting services to many companies including John Deere, a giant in the supply of agricultural and forestry products and services in the United States. Compared with the same period last year, the company's production and sales volume increased by more than 150%.

4. China National Chemical Corporation acquires Pirelli
On March 22, 2015, after a series of processes, the Italian tire manufacturer Pirelli Group announced that it had signed an agreement with China National Chemical Corporation (ChemChina) to sell 26.2% of its shares to the latter at a price of 15 euros per share. China National Chemical Corporation has invested a total of US$7.7 billion and will actually obtain Pirelli's controlling position.

In fact, Pirelli has been committed to technological research and development innovation for more than a century and a half since its establishment. Data shows that in recent years, Pirelli's average investment in research and development of high-value tires has accounted for more than 6% of its total revenue, leading the industry.