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Michelin Boosts Its Mining Business With Acquisition

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Michelin Group is upping its investment in the mining sector with the acquisition of Fenner plc, a maker of conveyor belts and reinforced polymer products for the mining industry.

Michelin's cash offer for all shares of the company, with headquarters in Hessle, United Kingdom, value Fenner at 1.3 billion British pounds. In 2017 Fenner recorded 655 million pounds in revenue.

Fenner operates two divisions. Engineered Conveyor Solutions (ECS) is the second largest maker of heavy conveyor belts, and is a "global player" in the heavy and complex conveyor belt solution market. The second division, Advanced Engineered Products (AEP), creates polymer-engineered products.

Michelin says the acquisition  "is in perfect strategic alignment with its ambition to leverage its expertise in high-technology materials."

The tire maker expects the addition of Fenner to help it provide a more comprehensive offering to mining customers, enhancing both sides of the business. In addition, it will build Michelin's portfolio in materials and will help the company "break into the reinforced polymer markets, notably in consumer goods, industrial devices and medical segments."

Jean-Dominique Senard, CEO of Michelin, says, “Michelin values the skills, experience and industry knowledge of the Fenner group’s management and employees. 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."

Mark Abrahams, CEO of Fenner, says, “We find the cultural fit and business opportunities excellent with Michelin. Both companies have innovation in their DNA and are customer solution oriented."

Already Michelin says it has identified "significant opportunities to achieve material cost savings" of 30 million pounds.

Each Fenner shareholder will receive 610 pence in cash for each Fenner share, representing a 30.7% premium to Fenner’s share price of 467 pence at the close of business on March 16, 2018, the last business day prior to the companies' announcement.

Fenner employed 4,330 people as of August 2017, and from 2010 to 2017 averaged net sales of 693 million pounds. In 2017 Fenner's net sales of heavy conveyor belts totaled 361 million pounds, and were distributed to these geographic regions: 43% Asia Pacific (including Australia); 36% in the Americas; and 21% in Europe, the Middle East and Africa (EMEA).

The polymers side of the business accounted for 294 million pounds in sales, with 61% of those sales in the Americas, followed by 21% in EMEA and 18% in Asia Pacific.

Fenner shareholders will meet in mid-May, and the deal, subject to court sanctions, is expected to close by the end of the second quarter of this year.

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