Cooper Tire & Rubber Co. has moved to acquire Serbian tiremaker Trayal, including its existing passenger tire plant in Krusevac, Serbia.
According to reports, Cooper is paying 13 million euros to buy Trayal.
Although Cooper’s statement on the deal did not name the company, the tiremaker’s interest in investing into Trayal has been known since mid-2011. The agreement to acquire Trayal’s passenger tire business was signed on Dec. 8 by Hal Miller, president of Cooper’s international tire unit, and Serbia’s minister of economy, Nebojša iri. Serbia’s Prime Minister Mirko Cvetkovic also attended the signing.
The Trayal plant is located some 200 kilometers south of the Serbian capital, Belgrade, in a location Cooper describes as providing “an excellent location to supply tires to the European and Russian markets.” The new wholly owned subsidiary will be known as Cooper Tire Serbia and will complement Cooper’s existing European operations and products, including the high performance tires manufactured in its Melksham plant.
Cooper says the Serbian firm’s acquisition is “a logical next step in the high quality, cost-effective manufacturing footprint underpinning Cooper’s strategy of profitable top-line growth.”Including the initial investment of approximately 13 million euros and with the Serbian government supporting the project in several ways, Cooper plans to invest more than 50 million euros in the operations over the next three years. Support from the Serbian government could total a possible 10 million euros if certain goals are achieved, the tiremaker adds. Miller is reported as saying annual output will increase from its current level of 500,000 tires per annum to 3 million units by the end of 2012’s first quarter.“The Serbian government is very supportive of this transaction and promoted the benefits of the location, the labor force and the competiveness in the region,” commented Miller. “As a global tire company, developing this well-situated source of quality supply will benefit customers, employees and our shareholders. We are extremely excited about the momentum we are building and the role this operation will play in our future.”In addressing the timetable for the new operations, Julian Baldwin, vice president and managing director of Cooper European operations, commented: "We look forward to working with the experienced local work force in preparing to produce tires in Krusevac. The plant will initially employ 400, with plans to grow to a production capacity of three million tires with 600 to 700 employees within three years. There is room for even greater capacity with further investment in the business."It is only a couple of years since the Trayal production lines stood still for several months and workers went on strike over unpaid wages, Trayal’s privatization and sale to Bulgarian power supplier Brikel EAD in 2006 delivered mixed results.
After this deal, Brikel retains a majority shareholding in Trayal’s truck and bicycle tire making businesses. Serbia’s government has also taken a 24% share in the company after agreeing to convert what Brikel owes in unpaid taxes into equity.The transaction is expected to close during the first quarter of 2012 and is subject to regulatory approvals, confirmatory due diligence and other conditions. (Tyres & Accessories)