Why Yokohama is buying Alliance for $1.2 billion

Yokohama Rubber to expand commercial business with ATG acquisition. © Yokohama

Why Yokohama is buying Alliance for $1.2 billion?

Yokohama Rubber is buying Alliance Tire Group (ATG)  for $1.2 billion as part of its plans to expand its commercial tire business. The acquisition, from private equity giant KKR, is expected to be finalized July 1.

Why does Yokohama want ATG?

While it does produce some industrial tires, such as for earthmovers and cranes, Yokohama Rubber doesn’t currently manufacture or sell tires for agricultural or forestry machinery and buying ATG will strengthen Yokohama’s product offering in commercial tires.

This is central to the company’s Grand Design 100 management plan, which sees expansion of its commercial tires as a “core pillar” in its business strategy. Yokohama is devoting a lot of resources to developing and expanding sales of ultra-large radial tires for mining and construction equipment, and the company also recently started production of truck and bus tires at a new plant in Mississippi.

According to Yokohama, “agricultural equipment tire demand is expected to increase as a result of the growing use of agricultural machinery, which is crucial to improve agricultural efficiency to meet the increasing food needs for the world’s growing population.” So, it sees commercial tires and the acquisition of ATG as essential to accelerating the “globalization” of the company by meeting needs worldwide.

What’s the story with ATG?

ATG is a leading name in the global off-highway tire industry and specializes in the manufacture and sale of tires for agricultural, industrial, construction and forestry machinery.

It sells radial and bias tires for vehicles in 120 countries across six continents, with a focus on the North American and European markets. Its parent company, Alliance Tire Group BV, is based in the Netherlands and owns three world-renowned brands – Alliance, Galaxy and Primex.

The group itself was founded by Ashok Mahansaria and Yogesh Mahansaria, who have been leading names in the off-road tire industry for years. ATG BV has been remarkably successful to date, with an annual turnover of $500 million, 1,200 employees, more than 2,200 dealers and expertise spanning 60 years.

ATG is also headquartered in The Netherlands with regional headquarters in the U.S., India, South Africa and Israel, as well as having offices and representatives in Argentina, Australia, Brazil, Canada, China, France, Germany, Iberia, Italy and Scandinavia.

There are three manufacturing facilities, one in Hadera in Israel and two facilities in India. ATG also has tires produced by contract manufacturers in China and Taiwan. Its state-of-the-art research and development facilities in Israel, the U.S. and India are a core part of the business too; in the last two years, ATG has added and delivered more than 225 new products. So it looks like Yokohama is well on its way in its globalizing mission when it finalizes the sale later this year.

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