Tokyo based Yokohama Rubber Co. Ltd has agreed to buy Alliance Tire Group, a Netherlands-based company led by Indian entrepreneur Yogesh Mahansaria, for $1.2 billion from private equity firm KKR & Co. Ltd. Yokohama Rubber, a Japanese maker of passenger-car tyres.
- The Yokohama Group will acquire the 90% stake held by KKR and 10% of the Mahansaria family.
Billon Dollar Deal:
- The deal is valued at about 2.2 times Alliance Tire’s annual sales and more than 12 times its operating profit for the 2015 fiscal year. The deal is fifth largest off road tyre making market.
- KKR bought 90% stake in Alliance from Warburg Pincus in 2013 for about $500 million and the private equity fund will make more than 2x returns in constant currency terms through this transaction.
- Yokohama Rubber does not currently manufacture or sell tyres for agricultural or forestry machinery.
Alliance Tire Group:
- Alliance Tire Group Controlled by US based KKR Company was acquired by the Mahansarias with the backing of Warburg in 2007 for $150 million. The company is headed by Chairman Ashok Mahansaria and his son Yogesh is group chief executive.
- Alliance Tire makes tyres for agricultural, industrial, construction, forestry machinery which it sells in 120 countries around the world, with a focus on the North American and European markets.
- ATG, which has 2 plants in India and 1 plant in Israel, was established in November, 2006 and had annual sales of $529 million and operating profit of $95million for FY2015.