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Apollo Tyres to buy Dutch firm

business Updated: May 06, 2009 23:28 IST
Sumant Banerji
Sumant Banerji
Hindustan Times
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In one of the biggest acquisitions in the industry, the country’s largest tyre maker, Apollo Tyres, is all set to fully acquire Dutch company Vredestein Banden. The deal is expected to be closed in a fortnight for a consideration of around $300 million (Rs 1,500 crore).

“We are looking at closing the deal by the middle of this month,” said Neeraj Kanwar, vice chairman and joint MD, Apollo Tyres. “Vredestein is a premium Tier 1 tyre manufacturer with a portfolio of high-end, high speed-rated passenger car tyres going up to a speed of 300 km per hour. We have a high synergy, but I will be able to give you details on this only once we achieve closure.”

The acquisition will help Apollo drive into the premium markets of Europe and US — which the company has been attempting for some time. Apollo recently put off plans to set up a greenfield plant in Hungary with an investment of $266 million (Rs 1,330 crore) citing delay in getting approvals.

“Vredestein was bought over by Amtel in 2005 for $260 million so this acquisition would at least amount to $300 million,” said an industry analyst on conditions of anonymity. “The deal is a win-win situation for Apollo as it not only gets access to high-end technology which it can also bring into India, but also a firm marketing and sales foothold in Europe.”

Apollo produces around 38 lakh passenger car radials in a year and exports around 7 lakh units per annum. Vredestein Banden has a capacity to make 5 million tyres per annum, which will more than double Apollo's passenger car radial tyre capacity.

Though Vredestein Banden's parent company in Russia, Amtel Vredestein, was declared bankrupt late last month, Kanwar claimed the Dutch firm has a strong balancesheet. The company had a turnover of $ 307 million in 2007-08.

"Vredestein is not a bankrupt company. It has been in continuous production and is financially healthy," Kanwar said. "It has been growing at a CAGR of 8.5 per cent for the last five years, which is far higher than the European growth rate."