Asia
News of Morgan Stanley Asia (Singapore) Pte’s investment in Apollo Tyres has prompted a slight rise in the Indian tyre maker’s share price. Morgan Stanley purchased 2.7 million Apollo shares – a 0.5 per cent stake in the company – for Rs 63.37 a share. After this news was released, shares rose briefly to Rs 64.80; still more than 31 per cent down on their trading price before Apollo announced it would acquire Cooper Tire & Rubber.
A number of tyre manufacturers have launched new products at Tyrexpo India 2013 in Chennai this week. Aeolus, BKT, Emrald and TVS Tyres have all introduced commercial tyres for applications from truck to OTR. Amongst these, Aeolus is notable for being one of a number of Chinese manufacturers making their debut in India. It is joined by its compatriots Hangzhou Zhonce, Linglong and Wanda Boto.
For the first time in 20 years the UK hosted the International Rubber Research and Development Board’s International Rubber Conference in 2013. The return to the country is well-timed; the Malaysian Rubber Board’s Tun Abdul Razak Research Centre celebrates its 75th anniversary in 2013, effectively elongating the IRC into a week-long event culminating in a well-attended visit to the picturesque Brickendonbury Estate near Hertford, where TARRC is now based, and which for 20 years was the home of the IRRDB. On Monday 24 June the event, jointly organised by the IRRDB, the MRB and TARRC, opened in Mayfair’s Millennium hotel, with the morning sessions in particular providing topics of interest to tyre manufacturers.
Is this the opening shot in the anticipated round of consolidation within the tyre industry? Or is it merely an expression of courage, or cockiness, with Indian tyre manufacturer Apollo in the role of a predator, seeking to grasp the much-larger rival Cooper as prey and in doing so exposing itself to the risk that the US$2.5 billion price will land it in debt above its head? Is attack the best form of defence or has the Indian company overreached with this ambitious and financially-edgy expansion plan?
Kenda Rubber Industrial Co has reported its intention to increase its global production capacity for passenger car tyres by 50 per cent in 2013. The company will manufacture 38,000 units per day by the end of 2013 in order to meet rising market demand, with the increases coming in both its home market of Taiwan and in two Chinese factories. These include the Tianjin factory, which produced its first prototype tyre in May.
With the ink still drying on Apollo Tyre’s agreement to purchase Cooper Tire and Rubber, on 27 June Tyres & Accessories met with Apollo vice chairman and managing director Neeraj Kanwar at the company's new global marketing office in central London in order to get the inside line on the deal, the impending integration and the strategy behind the purchase.
In 2010, Apollo's owners, chairman Onkar Kanwar and vice-chairman and managing director Neeraj Kanwar, told the world that the company was aiming to break into the global top 10…at least. At the time this announcement was made you could be forgiven for thinking such a proclamation was either an exercise in hyperbole or in corporate goal setting. And why not? There's nothing wrong with aiming high, as many of the world's fastest growing tyre companies are clearly doing. After all, as the saying goes, “he who aims at nothing hits it”.
But with all the speculation that surrounded the company's decision to engage in takeover talks with Cooper at the end of 2012, the fact that the deal has now been agreed arguably isn't as much of a surprise as the speed with which the top 10 goal has been attained. Early indications suggest that the amalgamated Apollo/Cooper will be the seventh largest tyre company on earth. So what’s next? The exclusive club that is dominated and fiercely defended by the big five? Or, as is more likely, a period of integration and consolidation while the dust settles?
Worldwide-Marketing has launched a new brand and website to expand its international tyre bladders and related products sales programme. The products are manufactured by Polymer Industrial Products, also known as PIPCO. The new PIPCOWorldwide.com site is designed to support the expansion of the company’s global reach with offices in Central America, South America, Europe, Asia, and India. The increase in staff that comes with the move is expected to allow expansion of their turn-up bladder trial program, which has reportedly helped dozens of tyre plants increase their cure rates already.
Goodyear Tire & Rubber has announced Damon Audia’s assumption of interim responsibility for investor relations in addition to his current role as senior vice-president, business development. He takes over responsibility from Gregory A. Fritz, who Goodyear says left the company to “pursue other opportunities.” Audia will continue to report to Darren R. Wells, executive vice-president and chief financial officer.
A deal signed between Compagnie Financière Groupe Michelin and PT Petrokimia Butadiene Indonesia (PBI), a wholly-owned subsidiary of PT Chandra Asri Petrochemical Tbk (CAP), will see the production of styrene and butadiene-derived synthetic rubber taking place in Indonesia through a joint venture firm. The agreement gives Michelin 55 per cent ownership in the new company, with PBI holding the remainder. The total investment is estimated to be US$435 million, with plant construction expected to commence in early 2015. Completion and start-up is targeted for the beginning of 2017.
Further details of Apollo’s Cooper Tire acquisition have been published by Indian brokerage house Angel Broking. In its 13 June market outlook report, Angel Broking notes that Apollo Tyre’s acquisition of Cooper Tire & Rubber will be funded entirely through debt. Apollo, it elaborates, plans to form a new holding company in the Netherlands involving Cooper and Vredestein, which would raise US$2.1 billion in debt via bonds. The major portion of the debt will be backed by Cooper and Vredestein’s assets. The remaining debt $450 million debt will be raised at Apollo’s Mauritius subsidiary and serviced by its standalone business, says Angel Broking.
At an official ceremony on 4 June, attended by around 400 guests, German specialty chemicals firm Lanxess inaugurated its new butyl rubber plant on Singapore’s Jurong Island. Built at a cost of 400 million euros, the facility is the company’s largest ever single investment and is described as being the “most modern of its kind in Asia.” The 100,000 tonne per annum plant will produce premium halobutyl rubber and regular butyl rubber.
At its meeting on 27 May, JK Tyre & Industries Ltd’s Board of Directors confirmed the promotion of Raghupati Singhania from vice-chairman to chairman. Singhania is now chairman and managing director of the company.
Brazilian retread materials manufacturer, Vipal used Autopromotec as the platform to announce that it is re-purposing one of its Brazilian production plants. At the same time the firm launched a couple of new treads. The 25th edition of the show coincides with the fact that Vipal itself turns 40 this year, making it something of a multi-celebration for the company.
Perhaps the most important news for European and other export markets is the Brazilian company’s decision to repurpose one of its three manufacturing sites to focus exclusively on products destined for international exports. “This is an important decision that Vipal is taking regarding the foreign market. Thus, we will be able to provide all the required structure to serve with excellence over 90 countries around the world," said Plinio de Luca, Vipal's sales and marketing director say before the show.
Pirelli has rebuffed claims that its recent 1,000km test in Spain gave the Mercedes team, with whose 2013 vehicle and drivers the test was completed, any unfair sporting advantage over other teams. Speaking in a conference call with the press this afternoon, Motorsport director, Paul Hembery explained that the purpose of this test was to continue preliminary development for Pirelli’s potential 2014 tyres, though the manufacturer has yet to sign a deal to continue its supply. Hembery also clarified that the company has been allowed to test development tyres with available teams since March 2012, when it wrote to all the F1 teams to inform them of this position. These tests are conducted blind, meaning that only Pirelli can access the data drawn from the laps. Hembery also confirmed some details of the new tyres for use in 2013. The two new tyres are to be available for all teams to test in the Friday practice sessions in Canada, and it is anticipated that the full grid will support their introduction at Silverstone following these sessions. The tyres, Hembery said, are Pirelli technicians’ resolution to the delamination issues witnessed so far this season, and were developed in the laboratory rather than via track testing.
Infinity Tyres is now recognised around the world for its growing OTR tyre range. Following extensive trials in demanding conditions across Australia, Africa and Asia, Infinity’s speciality heavy-duty mining tyres are now first choice fitments across a range of fleets operating in the most extreme environments.
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