Kal Tire Buys Majority Stake in OTR Tyres - Tire Review Magazine

Kal Tire Buys Majority Stake in OTR Tyres

Tyres & Accessories – Canada’s Kal Tire has bought a majority stake in Alfreton, Derbyshire-based OTR Tyres, creating the world’s first global earthmover tyre service company.

The OTR acquisition is said to have been financed by Kal Tire's cash flow from ongoing operations.The two companies will be rebranded under one name at some point in the future. This means “a gradual migration to a new brand over time.” OTR’s Alfreton head office will continue to be an administrative hub for the various OTR businesses.

Kal Tire will now control 51% of the company, with OTR Group managing director Chris Skelton holding a 49% share.

Skelton commented: “OTR are very pleased to announce that Kal Tire – the world’s largest earthmover tyre dealer – have made a majority equity investment in the OTR Tyres Group. This investment represents the most significant global transaction in the earthmover tyre service industry, as it sees the creation of the first truly global earthmover tyre service company.”

According to the company, the deal is the culmination of lengthy discussions between OTR and Kal Tire where the focus has been on providing a better service offering to customers on a global basis. The theory is that as customers in this segment operate across continents, and tyre suppliers have a global product offering, they also require a global tyre-servicing partner. Now, says OTR, if a customer has a mine in South America, Africa and Australia it will be possible to have the same standards of health and safety, tyre service, training, tyre monitoring and reporting across all mine sites.

OTR has grown considerably over the last three years and has started trading in two new countries so far this year. According to Skelton, “having a bigger partner will give us the opportunity to accelerate this growth.”

With the addition of OTR, Kal Tire will have almost 4,000 employees operating in 14 countries. Kal’s Mining Tyre Group specifically employs around 800 people. Like OTR, Kal Tire is private company, specifically a partnership founded by Tom Foord, whose family remains its majority partner.

Last year Kal Tire’s sales exceeded CAD$1 billion (US$966 million), with – say company representatives – consistent profits and little debt. The OTR acquisition is said to have been financed by cash flow from operations. Kal Tire Mining Group president, Bob Wallis, pointed out that OTR wasn’t purchased by investment bankers looking to resell the company. “We’re tyre people and our company will be in this business long after all of us have retired,” he said.

Kal Tire was started in 1953 in Vernon, B.S., primarily providing tyres and service to the local logging industry. The company now owns 164 branches, works with 49 independent associate dealers; and runs 10 truck retread plants, two OTR retread plants and four distribution warehouses providing car, truck, industrial and small earthmover tyres.

The company entered the mining tyre industry as Copper Tyre in 1968 and opened a small OTR retread plant servicing the gold, silver and copper mines in the interior of British Columbia. The 1990s saw further acquisitions that led to a presence in the oil sand mining market in Alberta. The oil sands reserves in Canada are thought to be the second largest reserves of oil in the world behind that of Saudi Arabia. According to the company, these operations now have the largest fleet of 400 tonne dump trucks in the world, all serviced by Kal Tire engineers in winter temperatures of -40°C. There are single customers in this region that spend more on tyres than the whole of the U.K. earthmover tyre market.

Kal Tire also has operations in Chile, Argentina and Bolivia. A partnership in 2002 with J & M Tyre in Oshawa, Ontario, added an OTR retread plant and expanded the group’s reach into eastern Canada and the United States. In 2007 another acquisition saw the start of a partnership with Grimaldi in Mexico that has given a Central American presence with operations in Mexico, Colombia and Panama.

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