Michelin buys Camso

As of today, Michelin is the proud new owner of Canadian off-road tyre and track specialist Camso. The two parties have reached an agreement for the acquisition of Camso and the integration of its off-the-road operations with those of Michelin in order to form a new division that will be managed from Quebec. Michelin comments that this new entity will be the “world leader in OTR mobility.”

Reporting net sales of US$1 billion, Camso has been designing, manufacturing and marketing OTR mobility solutions since 1982. The company specialises in rubber tracks for farm equipment and snowmobiles, and in solid and cross-ply tyres for material handling equipment. It also ranks among the top three players in the construction market, in track and tyre solutions for small heavy equipment. Michelin notes that Camso has expanded at an average rate of seven per cent a year since 2012.

The new business will benefit from the expertise of Camso’s Magog, Quebec-based management team and Michelin’s long-standing presence in Canada, both in Laval, Quebec and in Nova Scotia. As world leader, the new entity will represent more than double the net sales of Camso and be supported by 26 plants and approximately 12,000 employees.

According to Michelin, the acquisition will deliver the following benefits:

In marketing and sales:

In the agricultural market, the creation of a unique player providing its customers with a comprehensive range of premium radial tyres and tracks.

In the construction market, Camso will reinforce Michelin’s offering with its cross-ply tyres and tracks offers.

In the material handling equipment market, Michelin will leverage Camso’s Solideal and Camso brands to become the market leader in solid tyres.

The deployment of the new entity’s offer will be accelerated by the complementarity of both Michelin and Camso’s distribution networks.

In technology:

Cooperation between Camso and Michelin researchers will bolster the Group’s innovation capacity in tracks and airless tyres. Cross-fertilisation of R&D expertise will enable the teams to consolidate the group’s position as a global technological leader in support of sustainable mobility, as Michelin’s headway in terms of long-lasting performance of tyres is a differentiating factor and a key strength for reducing its environmental footprint. In addition, Michelin’s technological breakthroughs in reducing soil compaction while maintaining superior traction, for example, will contribute to the products that Camso develops.

In manufacturing:

A strong manufacturing presence of Camso in emerging markets, particularly in Sri Lanka and Vietnam.

“Michelin and Camso have many values in common,” said Jean-Dominique Senard, chief executive officer of the Michelin group. “This acquisition is a wonderful mutual opportunity. Michelin will benefit from all of Camso’s skills in the off-the-road mobility markets and Camso from the full range of Michelin’s expertise in the specialty markets.”

“Joining up with Michelin’s off-the-road teams is a fantastic opportunity for Camso because of the similarity of our cultures as well as our growth potential,” said Pierre Marcouiller, executive chairman of Camso. “Camso will achieve its ambition to become the global off-the-road market leader and will contribute its dynamic teams, its technical and manufacturing assets and its customer-focused mindset. The transaction has received the backing of all Camso’s shareholders.”

Through studies and discussions with Camso, Michelin has identified significant opportunities to increase sales and reduce costs, thereby unlocking up to US$55 million in synergies by 2021. After obtaining the customary approvals, Michelin will acquire Camso for US$1.45 billion, corresponding to an enterprise value of US$1.7 billion, i.e., a multiple of 8.3 times EBITDA (1 April 2018 – 31 March 2019) after synergies. The transaction will not impact the Group’s robust financial position.

As part of the transaction, Michelin has made the following commitments:

The OTR division’s decision-making centre will be based at Camso’s headquarters in Magog. The management teams, including the top executive, will work out of the Magog office.

Headcount at Camso headquarters (300 employees, of which 100 in R&D) will remain stable, and existing R&D operations and production jobs in Quebec will be maintained.

The new skill sets required to oversee this global business, and the anticipated growth in the division’s net sales, will lead to the creation of new high-quality jobs in the Magog region in the coming years.

With this transaction, the Michelin Group is confirming its strategic commitment to expanding in the tyres and services domains while rolling out its strategy in materials and distribution. Michelin also indicates that, following a thorough analysis, the synergies expected to result from the Fenner acquisition have been revised upward, to £60 million from the initially announced £30 million.