January 31, 2006/busrep
Pretoria - Dunlop Tyres, the privately owned local company previously listed on the JSE, has been acquired by the Mumbai Stock Exchange-listed Apollo Tyres for $62 million.
Dunlop, which has an annual turnover of R1.7 billion, is owned by Ethos Private Equity and a consortium comprising the company\'s management.
In 2003 its shareholders acquired the global brand ownership rights of Dunlop, excluding certain major countries. Apollo Tyres will acquire 100 percent of the company and will use Dunlop\'s local brand rights and African territories.
The transaction is still subject to regulatory approval. However, the purchase excludes Dunlop\'s interests in Dunlop Nigeria, Dunlop Zambia and Dunlop International Limited, the brand company.
Mike Hankinson, Dunlop International\'s chief executive, said these assets would be retained by the Dunlop\'s current shareholders, who would continue to manage them.
The acquisition represents Apollo\'s first foray into the global manufacturing arena and is expected to result in the combined entity ranking 14th globally in size.
Onkar Kanwar, Apollo Tyres\' chairman and managing director, said his company saw tremendous synergy in the operations of the two firms, which could \"leverage each other\'s strengths to be a global force\".
Kanwar\'s family is the majority shareholder in Apollo. Group Michelin of France owns a 14.9 percent stake in the company. Hankinson said Dunlop had been sold as a going concern and the transaction included the company\'s entire workforce and senior management.
\"We will get some assistance from them [Apollo] in terms of a senior executive to help us largely in production areas, which I think will be good for us,\" he said.
The acquisition would further enhance the firm\'s considerable technology, with its current radial technology boosted by Apollo\'s inhouse technology coupled with support from their European and North American arrangements.
\"Both parties will benefit from the combined purchasing power of the group. As India becomes a global powerhouse, the new entity will enhance the African manufacturing plants in Durban, Ladysmith and Bulawayo.
\"Low-cost manufacturing capabilities and techniques from India will assist Dunlop in cost containment into the future and assist us in competing with the sharp increase in imported cost competitive products into South Africa,\" he said.
Hankinson stressed Apollo would not add its product to its South African plants. \"They are looking at us as a separate independent organisation that adds value to them.\"
Eugene Stals, a partner at Ethos Private Equity, said leadership, together with innovative funding arrangements, had facilitated Dunlop\'s restructuring and subsequent growth.