Alliance Shows Strength in Europe, North America

It is now three years since Warburg Pincus and its partner, former Balkrishna Industries executive director Yogesh Mahansaria, announced an intention to acquire Alliance Tire. In the time since the Mahansaria family and their global private equity backer took possession of Alliance for approximately US$150 million, plans to develop the business have progressed steadily. Not only has the goal of taking advantage of India’s cheaper production costs been realised – the company’s $100 million cross-ply agricultural tyre factory in Tirunelveli has been readied for the start of commercial production – during 2009 acquisitions and further inroads into new markets boosted the Alliance brand’s profile considerably.

A day after GPX International Tire Corporation filed for bankruptcy on October 26, the Alliance Tire Group announced it had signed an agreement to purchase “certain” GPX assets. Despite rival interest from Titan International, who submitted a $44 million bid – $5.7 million higher than Alliance’s reported initial bid – on December 2, court approval of Alliance’s agreement was announced on December 8. This acquisition agreement places GPX International assets, customer relationships, warehouse footprint and engineering capabilities in Alliance’s hands. It also gives Alliance worldwide rights to the Galaxy and Primex brands, the company’s medium radial truck tyre distribution business and South African subsidiary, GPX Tyre South Africa (Pty.). While exact details of Alliance’s final bid remain unknown, it is said to be in excess of $50 million.

Purchasing the GPX assets, says Alliance, accelerates several key areas of company strategy, such as its growing presence in the North American OTR and agricultural tyre market and the group’s global tyre portfolio. It will also give Alliance access to a well-established distribution footprint in the US and enable it to take advantage of GPX research and development. Alliance will continue to market Galaxy, Primex, other GPX brands, and medium radial truck tyres to GPX’s customer base.

 “This acquisition is an exceptional step forward for Alliance Tire Group. It supports our strategy by adding a significant range of quality products to our portfolio as well as an expanding our ability to serve the North American market,” said Alliance Tire Group chief executive Yogesh Mahansaria, commenting on the deal. “This transaction reinforces the Group’s position as a key leader in the agriculture, industrial, and OTR tyre industry. We are fully confident that the synergy between the Alliance, Galaxy and Primex brands will enable us to provide optimised solutions to the market.”

The European region – Alliance Tire’s principal market – constituted an additional focus for the company in 2009. On July 28 the company presented details of its “initial steps taken to strengthen the Group’s presence in the European market”. Upon making this announcement, Alliance Tire Group CEO Yogesh Mahansaria stated “expanding our presence in the European market demonstrates our determination to keep this commitment and to improve the range and quality of the services we provide.” A new marketing subsidiary, Alliance Italy s.r.l, was set up in order to “answer the need for better response time and technical support” within this region, and at the same time a new Western Europe sales manager was appointed. Erik van Roy, who has formerly worked for Bridgestone Industrial and Solideal International, took on responsibility for Alliance’s customers in Germany, The Netherlands, UK, Ireland, Switzerland and the Nordic countries.

In December, Alliance announced the inauguration of Alliance Europe BV’s new office. The company selected the Netherlands town of Halsteren as the site for the office, commenting that the location positions it well to ensure improved responsiveness and to serve the market in a quick and reliable manner. According to Alliance adds that the move to a new office “facilitates the group’s ability to provide excellent customer support and sales services to its European business partners.”

 “Part of our mission is to expand our worldwide sales & support teams and establish long term partnerships to ensure customer’s satisfaction,” said Angelo Noronha, Alliance’s recently appointed vice president, Group Marketing. “Expanding our presence in the European market and opening the new Alliance Europe BV office in the Netherlands demonstrates our determination to keep this commitment and to improve the range and quality of the services we provide.”