Yokohama Rubber Co has agreed to buy out Alliance Tire Group (ATG), controlled by US private equity giant KKR, for about $1.2 billion in one of the biggest private equity exits from an India-focused investment and one of the largest strategic investments so far this year. The Japanese firm will acquire the 90% stake held by KKR and 10% of the Mahansaria family. The acquisition is expected to be concluded on July 1, 2016, Yokohama said in a statement on Friday. ET was the first to report a possible deal on February 7. KKR bought 90% stake in Alliance from Warburg Pincus in 2013 for about $500 million and the private equity fund will make more than 2x returns in constant currency terms through this transaction. The deal will also mark KKR’s third exit from India after it sold stakes in Bharti Infratel last year and Dalmia Bharat earlier this year. Barclays advised Yokohama while Credit Suisse advised ATG. The transaction will be the second-biggest exit by a PE fund from an India-focused company after Apax Partners sold its iGate stake in a $4.1-billion deal with Capgemini last year. The deal is part of Yokohama Rubber’s plans to expand its commercial tyres business, the Japanese firm said. “Yokohama Rubber does not currently manufacture or sell tyres for agricultural or forestry machinery. The acquisition will strengthen Yokohama Rubber’s product lineup in commercial tyres,” Yokohama said in the statement. The demand for agricultural equipment tyres is expected to increase due to growing use of farm machinery, which is crucial to improving efficiency to meet rising global food needs.
Source: Economic TimesYokohama Rubber Co to buy Alliance Tire Group for $1.2 billion
Industry: Rubber 2016-03-28
