Michelin to acquire Fenner PLC

Stating that such an acquisition would be “in perfect strategic alignment with its ambition to leverage its expertise in high-technology materials,” Michelin has announced its intention to purchase UK-based firm Fenner PLC.

Headquartered in Hessle, East Yorkshire, Fenner is a global leader in reinforced polymer technology and last year achieved annual revenues of £655 million. The company provides conveyor belt solutions and reinforced polymer products for the mining and general industrial markets.

Fenner operates two divisions: Engineered Conveyor Solutions (ECS), the second largest producer of heavy conveyor belts and a global player in the heavy and complex conveyor belt solution market, and Advanced Engineered Products (AEP), a leading player in diversified polymer-engineered products. Fenner uses its expertise to identify, design and manufacture locally engineered and performance-critical polymer products for niche markets around the world.

The transaction is expected to deliver the strategic benefit of offering mining customers comprehensive solutions ranging from tyres to conveyor belts, as well as related services and solutions, and enhance both companies’ geographic reach. Furthermore, noting that Michelin and Fenner are both technological leaders with premium product portfolios, Michelin looks forward to broadening its high-tech materials expertise and innovation. The addition of Fenner’s polymer portfolio will help Michelin break into the reinforced polymer market, notably in the consumer goods, industrial devices and medical segments. Michelin is further developing its expertise in advanced materials and engineered products, and Fenner will form the cornerstone of this process.

“Michelin values the skills, experience and industry knowledge of the Fenner group’s management and employees,” said Jean-Dominique Senard, chief executive officer of Michelin. “Mastering high-technology materials is key to creating value in the coming years. Fenner will enable Michelin to accelerate its growth in this area, and to strengthen its position as a key player in the recovering mining markets with a comprehensive offering.”

“We find the cultural fit and business opportunities excellent with Michelin. Both companies have innovation in their DNA and are customer solution oriented,” added Mark Abrahams, chief executive officer of Fenner.

Following an analysis and discussions with Fenner, Michelin has identified significant opportunities to achieve material cost savings, of which £30 million immediate annual synergies, unlock processing efficiencies and leverage R&D skills, with a view to delivering faster growth and creating significant value.

Fenner has been valued at approximatively £1.3 billion on an enterprise value basis, and under the terms and agreement of the cash acquisition by Michelin, each shareholder will receive 610 pence in cash for each Fenner PLC share, representing a 30.7 per cent premium to Fenner’s share price of 467 pence at the close of business on 16 March 2018.

The acquisition is to be implemented by means of a court-sanctioned scheme of arrangement.