CEAT inks pact with Michelin to acquire Camso brand's OHT, tracks biz for $225 mn
The acquisition expands CEAT's global footprint in high-margin OHT segments like agricultural and construction equipment. With a $213 mn revenue base, Camso enhances CEAT’s portfolio and access to 40+ international OEMs
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Mumbai: Tyre maker and RPG Group company CEAT on Friday said it has entered into a definitive agreement with Michelin to acquire its Camso brand's off-highway tyres (OHT) and tracks business for about $225 million (Rs 1,905 crore). The acquisition is significant for CEAT in its ambition to become a leading global player in the high-margin OHT segment, as it will give the company access to a global customer base, including over 40 international OEMs and premium international OHT distributors, the company said in a statement.
The transaction, subject to regulatory approvals from relevant authorities, will include the business with revenues of about $213 million for CY2023 and global ownership of the Camso brand, along with two manufacturing facilities, in Sri Lanka, it said. "CEAT and Michelin announce that they have entered into a definitive agreement for CEAT to acquire Camso brand's off-highway construction equipment bias tyre and tracks business from Michelin in an all-cash deal valued at about $225 million," it added.
Camso is a premium brand in construction equipment tyres and tracks with strong equity and market position in the EU and North American aftermarket and OE segments, the company said. "The Camso brand will be permanently assigned to CEAT across categories after a three-year licensing period," it said. This will expand CEAT's product portfolio in the high-margin off-highway tyres (OHT) and tracks segments, which includes agriculture tyres and tracks, harvester tyres and tracks, power sports tracks and material handling tyres, the company said.
Michelin will, following this, exit from the activities related to compact line bias tyres and construction tracks, it stated. "This acquisition has significant strategic consequences for CEAT as it catalyses the company's journey towards being a leading tyre maker globally," RPG Enterprises Vice-Chairman Anant Goenka said. Over the last decade, CEAT has been focusing on building its OHT business, which now consists of 900+ product offerings and covers about 84 per cent of the range requirement in the agricultural segment, as per the company. Camso will give CEAT the ability to widen its product base into tracks and construction tyres, the company said, adding that CEAT brings in the ability for Camso to expand to other segments like agriculture tyres.
Both brands are highly complementary in their positioning and capabilities, it noted. "Michelin firmly believes that CEAT is the right fit to carry on our bias tyres and tracks for the compact construction equipment business. Both our companies are fully committed to ensuring a smooth transition for our employees and business continuity for our customers and suppliers. "With this operation, Michelin is continuing to reshape its Beyond Road business, in line with the Group's sustainable growth strategy," said Nour Bouhassoun, Senior Vice President, Beyond Road Business Line at Michelin.
CEAT Managing Director and CEO Arnab Banerjee said, "The track segment is a technologically superior segment with a limited number of global players. "We also found high synergies between the two brands, CEAT and Camso, and are confident that both will benefit tremendously from their complementary capabilities and positioning." CEAT and Michelin are "committed" to a coordinated and smooth transition for customers, suppliers and all employees, the statement said.
Michelin, in a separate statement said the sale of the two manufacturing facilities will not result in any layoffs and the two companies are "committed" to working hand-in-hand to ensure a smooth transition for all employees, customers and suppliers. "Michelin is selling its Sri Lanka-based Midigama tyre division and casting product division plants that manufacture bias tires and tracks for compact construction equipment, to the CEAT group, that is a better fit for these activities," the company said.
"With this operation, Michelin and CEAT are aligned and do not intend any layoffs at either of the two plants. Michelin and CEAT will work together to implement appropriate measures for all 1,587 employees at the two plants and the related support functions, creating the right conditions for a smooth handover between the two companies," Michelin said.
