Delticom Eyes Up Emerging Markets with Tyrepac Purchase

On 13 December 2010 Delticom AG, purportedly Europe’s leading online tyre retailer, announced that it had made its first move into the burgeoning Far Eastern markets with the acquisition of a majority stake in Tyrepac Pte Ltd, Asia’s first tyre portal. So far no pricetag has been associated with the deal, but Tyres & Accessories understands that the transaction is structured as a capital increase at Tyrepac to fund the company’s further growth and geographical expansion into further markets in Asia. The partnership is meant to create a truly global tyre dealer, active in more than 40 countries on three continents.

Following T&A’s publication of the general details associated with the move yesterday, further information relating to the background and rationale of the move can now be reported

As you would imagine with an e-tailer, Tyrepac provides consumers in Asia a central platform to buy tyres online. In addition, the company operates a growing network of service partners who stand ready to fit the tyres. Since its foundation in 2008, Tyrepac has expanded into Malaysia, Hong Kong, China, and South Korea. Starting from Tyrepac’s credible brand and proven track record, the joint venture will help Delticom to reach into new high-growth, emerging markets. And it seems to be this that attracted the European online tyre market leader to Tyrepac.

“The acquisition is a landmark development for our customers, partners, and the team. We are excited to be part of the Delticom Group”, says Ler Hwee Tiong, co-founder and managing director of Tyrepac. Rainer Binder, CEO of Delticom added: “The transaction is an important building block in our long-term Asian strategy.” “For Tyrepac, the cash inflow paves the way for accelerated growth,” Frank Schuhardt, CFO of Delticom and member of Tyrepac’s executive committee commented.

Why Tyrepac? Why now?

Tyrepac, which was founded just two years ago in Singapore, now operates in several Asian countries. In Singapore, consumers can also have tyres fitted via its mobile fitting service. Tyrepac also offers quotation for batteries, automotive insurance, and servicing packages in collaboration with its service partners.

According to the two companies involved, Delticom has opted to expand into the Asian markets via the acquisition of Tyrepac because after just two years of operation, Ler Hwee Tiong and his team at Tyrepac have been able to “establish an amazing track record and create a credible brand.”

Ler Hwee Tiong will continue in the position of Tyrepac managing director while both of the other co-founders will continue to serve as non-executive directors. None of them have sold their shares, which says something about their belief in the future growth prospects of Tyrepac. Frank Schuhardt, Delticom executive board member, will serve on the executive committee but will not take on operational responsibility.

Tyrepac reports that this is first time a sizable tyre industry player (from Europe) has ventured into Asia via an equity investment in Singapore. And the fact that a young tyre company like Tyrepac has been able to attract such an interest from abroad is said to definitely be “a first” in Singapore.

As a result of the deal further support for expansion plans is also expected to come from Delticom’s strong balance sheet. Over the course of the next months, both teams say they are going to “work closely together to integrate their systems and processes.”

The key players

Tyrepac MD Ler Hwee Tiong (40) graduated with a merit degree from the National University of Singapore in 1995 majoring in Economics and Geography, and has been in the tyre industry
since then. He relocated to Singapore in July 2008 with his family and headed the formation of Tyrepac, an internet based tyre retailing concept-after reportedly being “captivated by the power of the Internet.” According to company literature, Ler was last sales director of the Asia region for “an American
manufacturer” and was based in Shanghai, China.

Frank Schuhardt (41) is chief financial officer and head of e-commerce operations and business development at Delticom. He served as a member of Delticom AG’s supervisory board from 2000 to 2005, and has been employed by the company since January 2007. Before joining Delticom he was Partner at DVC, a venture capital fund based in Munich, Germany, where he was responsible for investments in software and the Internet. Previously, Frank headed the fixed income trading business at HSBC Germany. He holds a university degree in business administration.

Founded in 1999 Hanover-based Delticom operates more than 100 online shops in 35 countries and has
served more than 4 million customers so far. The company offers a wide range of products for private and business customers: over 100 tyre brands for cars, motorcycles, commercial vehicles and buses, but also complete wheels, motor oil, replacement parts and accessories. Delticom is listed on the German Stock Exchange and as of December 2010, market capitalisation stands at approximately 750 million euros (S$ 1,300 million). The company is expected to end the 2010 fiscal year with revenues totalling more than 400 million euros (S$ 700 million), growth of around 30 per cent year-on-year (2009: 311 million euros; S$ 540 million).

Related News:

• Delticom Acquires Asian Retail Portal
• Pneus Online Reports 40% Sales Increase Due to UK Online Tyre Purchase Habit
• Tyrepac Aiming for £1.2 million in 2010
• Tyrepac Launches China Tyre E-Tail Portal