Apollo, Sumitomo close African deal

The sale of Apollo Tyres South Africa (ATSA) to Sumitomo Rubber Industries has been closed, report Sumitomo and Apollo Tyres. In exchange for US$60 million, the Japanese firm now holds the rights to the Dunlop tyre brand in a further 30 African and two Indian Ocean region countries. Also included in the deal is the 9,600 tyre per day Ladysmith PCR factory that Apollo acquired as part of its Dunlop South Africa purchase in 2006, the ATSA distribution and sales network, and the ATSA distribution, sales and head office teams. Apollo retains the 2006-acquired Durban factory, which manufactures TBR and off-road tyres.

Following the deal’s closure, the Dunlop brand is a Sumitomo Rubber Group brand throughout the entire African continent. The company has also gained its first production facility within the region; it now intends to increase production capacity in Ladysmith to 12,000 passenger car and light truck tyres a day by 2016 and “greatly increase” the scale of its tyre sales in Africa. The acquired African operation will be renamed Sumitomo Rubber South Africa (Pty) Limited in early 2014 and is headed by former ATSA chief executive officer Riz Haffejee. Approximately 1,100 people work for the Sumitomo’s new company.

Apollo Tyres says it will continue to sell Apollo, Vredestein and Regal branded tyres in Africa, and is focusing on “creating and strengthening its sales and distribution network across the continent.” Both companies have agreed to undertake contract manufacturing of their respective brands at each other’s facility to enable the supply of African markets with locally-manufactured products.

Commenting on the closure of this transaction, which was first announced in May, Apollo Tyres chairman Onkar S Kanwar said “it has been a very eventful journey for us in Africa, since our entry in 2006 with the acquisition of Dunlop Tires International. This has given us a very sound understanding of the growing African market and helped us develop the market for our products in Latin America as well. Using South Africa as the base, we will now focus on brands where we own global rights, which we have already been selling in South Africa for the past few years, for the African and Latin American markets.”

Post transaction, the employees retained by Apollo in South Africa will work for the newly formed company, Apollo Durban (Pty) Ltd. Apollo notes that no layoffs resulted from this deal.