Matador sells share in Addis Tyre

Ethiopia based newspaper Addis Fortune reports the sale of a majority share in the country’s sole tyre maker, Addis Tyre SC. According to “reliable sources” that spoke to the English language weekly, Matador AS has sold its 69 per cent share in Addis Tyre to Horizon Plantations Ethiopia Plc. This purchase comes more than two years after a Memorandum of Understanding for the acquisition was signed – Addis Fortune notes that the share transfer was put on hold as the Ethiopian government owns the remaining 31 per cent of shares and therefore the country’s Privatisation and Public Enterprises Supervising Agency had right of first refusal on Addis Tyre.

Horizon plantations’ owner Mohammed Ali Al Amoudi is said to have paid $17.9 million cash for the share, concluding the transaction with Matador parent company Continental last week. At present Addis Tyre has a reported 17 per cent share of Ethiopia’s tyre market – around 150,000 of the almost 900,000 tyres sold there annually. Under Matador’s management, which began in 2004 with the purchase of its 69 per cent stake from the Ethiopian government, the company invested in the introduction of radial tyres and developed the potential to increase annual production from 200,000 to 550,000 units. The company’s interest in the Ethiopian factory purportedly changed following Continental’s 51 per cent acquisition of Matador in November 2007, however.

Horizon general manager and minority shareholder Jemal Ahmed commented to Addis Fortune that Continental wanted Matador to cease production in Africa. “They are no longer interested in the African operation but want to focus in BRIC countries,” Jemal told the newspaper.

As part of the deal Continental will provide technical assistance for a two-year period. ““Continental AG will designate resident technical assistants, and has agreed to train our staff both at the factory site and in Hanover,” Jemal commented. New management will be introduced to Addis Tyre and Jemal says the plan is to increase market share to 36 per cent. The company is currently studying how much it will need to invest in order to boost annual capacity. “This project has a higher value of import substitution, a key objective in the government’s strategic direction,” Jemal stated. “It demands huge investment and long-term commitment.”