Galaxy acquires Serbian tire manufacturer

Feb. 21, 2003

Galaxy Tire & Wheel Inc. recently acquired a controlling interest in Rumaguma AD, a manufacturer of agricultural and off-road tires located in Serbia.

Galaxy says the acquisition is part of a "far-reaching privatization program currently being undertaken by the Serbian Government."

More than 75% of Rumaguma's production is exported. The company was established in 1980 and began producing tires in 1982.

The purchase ensures "a permanent and secure source of supply for Galaxy’s critical original equipment products for customers such as Case New Holland, John Deere, Caterpillar and Terex," says the company. "With the Rumaguma acquisition, Galaxy will have the needed capacity to both satisfy current demand and support Galaxy’s expansion plans for many years to come."

Galaxy assumed day-to-day operational control of Rumaguma AD yesterday. It will be moving its people into the top management positions.

Galaxy says it intends to continue to supply Continental AG, one of Rumaguma's largest customers, as well as Rumaguma’s other domestic and export customers.

Galaxy products will be produced using Rumaguma’s excess capacity (Rumaguma is operating at 65% of installed capacity, according to the company). By filling capacity with Galaxy and Constellation products, Galaxy says it will be able to improve Rumaguma’s operating efficiencies and reduce its overall cost structure.

As part of Galaxy’s bid for Rumaguma, Galaxy outlined a multi-million dollar capital expenditure program to be implemented over the next five years. This program is designed to both modernize the factory and double its capacity.

Galaxy also plans to aggressively expand its North American and European dealer base with the help of the acquisition.