MUMBAI: Apollo TyresBSE -1.71 % is competing with Chinese rivals Shandong Linglong Tyre and ChinaChem to acquire South Korea’s No. 2 tyre maker Kumho Tire in a deal pegged at $900 million, multiple sources told ET. If the Indian company is successful, the deal will create a tyre maker that ranks among the top seven with a strong presence in the US and Europe.
The three are among four suitors shortlisted with the fourth said to be French heavyweight Michelin, though ET could not confirm this independently. The move follows Apollo’s failed $2.5-billion bid to buy Cooper Tire of the US two years ago.
The share sale process for a 42 per cent controlling stake, initiated by a consortium of creditors that took over seven years ago, is in its final stages. Credit Suisse is running an auction process for the creditors, including Woori Bank (which owns 14.2 per cent), Korea Development Bank (13.5 per cent) and KB Kookmn Bank (4.2 per cent).
Apollo is in talks with several global banks for bridge financing, the people cited above said. Meanwhile, Kumho’s board has extended the deadline for final bids to Monday from Friday, sources said. Germany’s Continental AG, GoodyearBSE -3.30 % Tire of the US and Japan’s Yokohoma are said to have also showed interest in Kumho before backing out.
An Apollo spokesperson declined to comment. Kumho, Michelin, ChinaChem and Shandong Linglong did not respond to queries. Kumho’s main creditors announced the share sale plan last week through an exchange notification.
The Chinese companies are serious contenders. “Chinese players are very aggressive. Who would have thought ChinaChem would scoop up one of the marquee brands like Pirelli for $7.7 billion in 2015 beating global names,” said an investment banker. “The Chinese would bid aggressively here too.”
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Source: Economic Times
