Yokohama Rubber Co. Ltd. plans to purchase the Alliance Tire Group (ATG) in a deal that exceeds $1.1 billion and is expected to be finalized on July 1, 2016.
Yokohama will acquire the commercial tire maker as part of an agreement it reached with KKR, an investment firm.
Yokohama says ATG has developed "a highly specialized business" manufacturing and selling tires for agricultural, industrial, construction and forestry machinery. ATG sells radial and bias tires for the aforementioned types of vehicles in 120 countries around the world, with a focus on the North American and European markets.
The acquisition will allow Yokohama to enter the farm and forestry tire markets, and the company says the acquisition will strengthen Yokohama’s product lineup in commercial tires.
Alliance produces tires in three plants, two located in India and a third in Israel, and reports annual sales of $529 million with operating profit of $95 million in 2015.
Yokohama says agricultural equipment tire demand is expected to increase as a result of the growing use of agricultural machinery, which is crucial to improve agricultural efficiency to meet the increasing food needs for the world’s growing population.
Yokohama is currently in Phase IV (2015–2017) of its Grand Design 100 medium-term management plan, and expanding Yokohama's commercial tire business is a "core pillar" of the company's tire business strategy.
The company says it is devoting "considerable resources" to develop and expand sales of ultra-large radial tires for mining and construction equipment.
Yokohama's commercial tire business also has been boosted by the start of production at a new truck and bus tire plant in Mississippi, and the company says it plans to continue promoting "local production for local consumption."
