The Russians want Vredestein

Russia’s largest tyre manufacturer, Amtel, wants to take over Vredestein’s tyre unit. The Dutch manufacturer’s CEO, Rob Oudshoorn, confirmed with Tyres & Accessories that “detailed discussions” are well underway and an acquisition could take place in early 2005

For the companies involved a possible deal is a win-win situation. In Mr Oushoorn’s words: “one plus one equals three.” When the Vredestein boss visited the factories of its prospective partner in the summer, he said that he was surprised to see such modern equipment, observing that it was of a similar standard to his company’s Enschede factory.

Mr Oudshoorn believes that Amtel tyres are produced to a very high standard, but that there is still a quality gap between imported products and those produced in Russia. Mr Oudshoorn told T&A is in a good position to can fill this gap. Although the Dutch company already works with a Russia distributor, the company believes that the Amtel size and influence will help it to reach further. The Vredestein CEO described Amtel’s management as “reliable.” In response Amtel said it was impressed with Vredestein’s partnership with Giugiaro Design, adding that this would make it easier for the Russian company to penetrate the European and American markets. Furthermore the company said that the product quality is so good that it could sell both Vredestein and Amtel products through the same distribution network.

If all goes according to plan, the sale of Vredestein Banden shouldn’t be too complicated. Last summer the company was de-listed from the Dutch stock exchange after VICO (Vredestein Investment Consortium) bought nearly all of its shares. Before it de-listed, VICO already had a 61.2 per cent shareholding in Vredestein.

The most powerful VICO shareholders are A F van Vemde and S F Vis. In addition to Mr Vis’ privately held shares, his company, Janivo Holding, also holds shares in Vredestein. Both Mr van Vemde and Mr Vis sit on Vredestein’s advisory board.

If and when the sale takes place, the deal will include Vredestein’s Enschede plant and Amtel will own all subsidiaries involved in production, distribution and sale of tyres, as well Vredestein’s trademarks. Amtel will also take over all any current off-take agreements.

Relatively recently Vredestein took part in a failed joint venture with Fung Keong Rubber (Malaysia). The failure of the two companies’ partnership between one and two years ago led the company to find another partner. Vredestein attempted to compensate for its losses by working with PT Industri Karet Deli (Medang) of Indonesia.

Amtel told Russian media sources that any possible deal could be completed by February 2005. The manufacturer runs factories in Voronesz, Krasnoyarsk and Kirov and a carbon black factory in Wolgograd. In addition, Amtel owns a steel cord factory and a tyre production facility in the Ukraine. In last few weeks Amtel has been trying to sell its shares on the Moscow stock exchange. According to the company, Amtel currently has a 28 per cent share of the Russian market.

One model that has been the subject of some discussion is the possible foundation of a new company for purposes of acquiring Vredestein Banden. In the event that the Russian company follows this course of action,a new company called Amtel Holding Holland could be formed.

In the event that the two companies assets are consolidated, Amtel will become an international tyre producer with the annual turnover of more than $1 billion, the company said.