Michelin has signed an agreement to acquire 80 per cent of PT Multistrada Arah Sarana TBK (Multistrada), a tyre manufacturer based in Indonesia.
With a production capacity of more 11 million passenger car tyres, 9 million two-wheel tyres and 250,000 truck tyres, Multistrada generated net sales of $US281 million ($AU394 million) in 2017.
Michelin says that 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. Leveraging its technical expertise with limited new investment, Michelin says it will gradually convert production from Tier 3 passenger car tyres to Tier 2 Michelin Group brands.
In addition, through the transaction Michelin will acquire a 20 per cent stake in the retailer PT Penta Artha Impressi (Penta) in partnership with Indomobil and private investors, which 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.
“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,” said Jean-Dominique Senard, Chief Executive Officer of the Michelin Group.
Potential synergies in manufacturing, sales and purchasing are expected to represent up to $US70 million ($AU98 million) per year within three years of the acquisition.