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Micheline buys 80% in Indonesian tyre maker

Micheline buys 80% in Indonesian tyre maker

Michelin has acquired 80% in Indonesian tyre manufacturer PT Multistrada Arah for $ 439 million to strengthen its presence in Indonesia and support growth demand in Europe, North America and Asia.

In addition, through the transaction the French tyre company will acquire a 20% stake in the retailer PT Penta Artha Impressi in partnership with Indomobil and private investors.

The acquisition will be funded from internal financial resources and is not expected to have an impact on Michelin’s ratings.

Currently, Multistrada has a production capacity of more than 180 thousand Tons (i.e., 11 million Passenger car tyres, 9 million Two-wheel tyres and 250 thousand Trucktyres), Multistrada generated net sales of USD 281 million in 2017.

According to Michelin, with this transaction, it will strengthen its presence in the highly promising but local-production dominated Indonesian market by acquiring a very competitive local plant with good quality facilities and immediately available production capacity.

Going forward, leveraging its technical expertise with limited new investment, Michelin will gradually convert production from Tier 3 passenger car tyres to Tier 2 Michelin Group brands, thereby allowing more Tier 1production at other Asian plants and supporting growth of demand of Tier 2 volumes in Europe, North America and Asia.

Penta will boost the marketing and sales of Michelin Group brands in Indonesia allowing Michelin to secure significant access to a major market and be well placed to benefit from the market’s future growth and expansion.

Jean-Dominique Senard, Chief Executive Officer of the Michelin Group, said, “The acquisition of Multistrada represents an excellent opportunity for Michelin to expand its operations in Indonesia, the most populous country in Southeast Asia, and immediately gain competitive, good-quality production capacity without having to create any new manufacturing facilities.”

Pieter Tanuri, Chief Executive Officer of Multistrada, said, “we are very proud of what we achieved with Multistrada and we are confident Michelin is the ideal partner to take Multistrada forward into a new era of growth and success for the benefit of all stakeholders and employees.”

Potential synergies in manufacturing, sales and purchasing are expected to represent up to USD 70 million per year within 3 years of the acquisition. Multistrada, including the 20% stake in the retailer PT Penta and 50 hectares of available land, has been valued at USD 700 million enterprise value, representing 6.3 times EBITDA for the 12 months ended September 30th , 2018, after expected synergies.


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