Pirelli SpA has agreed to take over the assets of Sibur Russian Tyres after signing a memorandum of understanding with Russian Technologies and oil major Sibur Holding in Moscow on Nov. 26.
The deal, which is likely to position Pirelli as major player in the Russian market, comes after domestic market leader Niznekamskshina, owned by another oil major, Tatneft, confirmed it had been in merger talks with in August. The announcement comes a year after Pirelli signed an initial MOU with Russian Technologies at earlier talks in Moscow and less than a month after news reports quoted Sibur executives as saying the company planned to exit the tire business. According to the Milan-based tire manufacturer, the latest transaction is expected to close by June 2011. No financial details have yet been disclosed.
The cooperation will see the companies engage in a series of joint activities in the tire and steel cord sectors following the establishment of two joint ventures. As a result Sibur Holding will cede much of its car, agricultural and truck radial production assets to a 50:50 joint venture between Pirelli and Russian Technologies. This entity will maintain a 90% stake in the assets and Sibur Holding will hold the remaining 10%. Pirelli will manage these assets from the start, which is expected to lead to the establishment of a production capacity including 3 million predominantly "winter" car tires by the end of 2011.
Sibur Holding will also cede 40.1% of Sibur Russian Tyres, a company belonging to the Russian holding containing other tire activities, to a further 50:50 joint venture between Pirelli and Russian Technologies (JV2). JV2 will receive the OE car tire production assets, as well as those for the production of truck and conventional agro tires. According to an official statement, the value of the transaction will be determined on the basis of a valuation being carried out by “an adviser chosen by the partners.”
Pirelli also will directly acquire 10% of Sibur Russian Tyres in exchange for its managerial and technical input. Pirelli will therefore license its technology and production processes, participate in the plants’ technological upgrade, and provide its know-how in the areas of logistics, quality control and the organization of activities. Once these transactions and the reorganization of the activities of Sibur Russian Tyres by Pirelli, Russian Technologies and Sibur Holding are completed, Sibur Holding will have a 49.9% stake in Sibur Russian Tyres compared with its present 100%.
A new technological link between the two groups in synthetic rubber is also expected to facilitate the introduction of new kinds of synthetic rubber to improve tire performance. Further, the deal is designed to help create synergies between the automobile, tire and synthetic rubber sectors in Russia, improve the offering to customers and enhance the international competitiveness of the Russian tire and auto industries. (Tyres & Accessories)
