Analysts: 1 in 9 firms in the UK tyre market could change hands

Nearly 10 per cent of UK tyre firms could change hands due to the disparity between cash-rich and debt-stricken firms in the market. According to analysts from Plimsoll Publishing, 1 in 9 companies in the UK Tyre Manufacturers & Distributors industry could change ownership as a result of the current economic climate. Their prediction is that, with a surprising number of “cash rich” competitors waiting in the wings, the market could be set for a prolonged period of consolidation.

David Pattison, author of the firm’s latest tyre market report said: “I am sure any director worth his salt would agree that, in the current climate, there are simply too many companies chasing too little market. With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyers market out there for cash rich companies.”

Pattison continued: “In the Plimsoll Industry Analysis we have identified 23 companies that have a sizeable cash reserve sat on their balance sheets that, due to record low interest rates, is generating nothing. One company has a £62 million cash pot. These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them. They must be like kids in a sweet shop at the moment – all those distressed competitors available at a fraction of their true value”.

“The UK Tyre Manufacturers & Distributors market is still widely regarded as one of the UK’s most fragmented sectors. In our report we analysed 150 companies with a turnover of over £1 million per annum and have picked out 26 that are primed to be taken over. Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market. Either way, the market is set for a wave of takeovers in the next months”.

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