Tiger Wheels Buys Kentucky Plant

Tiger Wheels has reinforced its position in the North American market with the acquisition of a large-diameter wheel plant in Kentucky. The company reports that the plant is dedicated to supplying Ford motor manufacturing plants in Detroit, Louisville and elsewhere and cost $24 million.

The acquisition, which was made by Tiger’s 74 per cent owned German-based wheel manufacturing business, ATS Beteiligungs GmbH, looks a good purchase when the assets’ book value ($45 million) is taken into account. ATS Beteiligungs bought the facility from the Australian ION Group, which is currently in administration.

The deal will see the US alloy wheel manufacturer’s market penetration grow to as much as 10 per cent by the end of 2006, according to ATS CEO, Siegfried F Teichert.

Mr Teichert revealed that Tiger (also known as TiWheel) has committed a further $16 million for more than doubling the capacity of the Kentucky plant from 600,000 to 1,4 million wheels a year within the next 12 months.

Part of the terms of the sale agreement, prescribe that a further $4-million may be payable to the seller over the next two years in line with the achievement of production targets. The acquisition will be funded by existing resources and long-term loans to be raised by ATS from its global bankers.

Outlining the rationale behind the deal, Mr Teichert said: “Firstly, apart from the highly favourable financial terms, it would have taken many years for our Alabama plant to achieve a reasonable market share in Detroit – the vehicle manufacturing capital of the US.

“Secondly, Kentucky provides the opportunity for Tiwheel to obtain a meaningful share of the large diameter wheel market from a site close to major US motor manufacturers.

“What is more, it enables us to further expand the high-tech process efficiency developed in Germany into the US wheel manufacturing environment and, at the same time, to bring into our fold a wheel production team with a wealth of experience and a depth of knowledge of the North American wheel market.”