Page 16 - CTB N11 - 2015-03
P. 16

COMPANY NEWS
           What Will the Pirelli Acquisition Mean for the Truck Tyre Market?
 In case you missed it, in March it was announced that tyre manufacturer Pirelli was to be the subject of a takeover bid by China National Tire & Rubber Co. (CNRC), a division of the Chinese owned conglomerate ChemChina. In August ChemChina received antitrust approval from the EU for the 7.1 billion euro bid. CNRC’s intention is to acquire the 26.2 percent stake in Pirelli held by Italian holding firm Camfin and then make a mandatory takeover bid for the rest of Pirelli.
The proposed deal has profound ramifications for the global truck tyre market, as CNRC already owns several Chinese truck tyre brands, the most prominent of which are Aeolus and Double Happiness. Although Pirelli is best known globally for its car tyres, it is still a significant player in the truck tyre sector. Aeolus, meanwhile, is best
known for its truck tyres.
According to a statement by Camfin, it would appear that after the acquisition is completed, Pirelli’s truck tyre business will be “folded into ChemChina’s listed unit Aeolus, allowing it to double its output.” Indeed, merging Pirelli’s commercial vehicle tyre business together with Aeolus would create the fifth largest truck tyre company in the world, doubling the group’s CV tyre volume from 6 million to
12 million tyres. It is expected that after the acquisition Pirelli’s car and truck businesses will be separated and the car business run separately. Although the acquisition of the Pirelli car tyre brand is clearly a significant benefit for CNRC, many market analysts are pointing to the truck tyre sector as being potentially of the most value.
There is also the suggestion that the deal will catalyse consolidation
have been trying to crack the Chinese market in passenger tyres and truck tyres for years without much success. While Michelin has been forced to invest in the production of budget tyres to counter Chinese imports into Europe and the U.S., the CNRC- Pirelli tie-up creates a challenge in the core proposition and markets of Michelin and Bridgestone. If CNRC succeeds in also deploying Pirelli’s truck tyre technology to the booming truck tyre market in China, this would create a major challenge for Michelin and Bridgestone.”
Kool suggests Cooper and Continental as candidates for a tie- up or takeover and even goes so far as to suggest that even the likes of Goodyear may eventually come within the reach of ambitious Asian manufacturers.
Market analyst David Shaw, meanwhile, points out that Pirelli
clear for some time. However, the deal will certainly have implications for a number of companies. In recent times, as we have reported in this magazine, Pirelli have invested significantly both in products and systems for increasing their share of the truck tyre market. The Aeolus brand, meanwhile is currently marketed in the UK by Kings Road Tyres. Once the dust settles it will be interesting to see how the marketing of the two brands is handled in the UK market. Another relationship that will be interesting to observe is Pirelli’s co-operation with Vacu-Lug, who produce the tyre manufacturer’s range of retreads. Vacu-Lug, of course, is currently the UK agent for Aeolus’s competitor, Westlake.
within China’s tyre industry and potentially also on a global level. Tyres and Accessories point out that China is full of medium sized truck tyre plants operating at well below capacity apparently without any real plan for selling their products. This, many analysts believe may make them easy targets for acquisition by major global manufacturers worried that Pirelli have stolen a march on them.
K arel Cool, Professor of European competitiveness and Professor of Strategic Management at INSEAD writes; “China National Tire & Rubber Co. buys a technology base in passenger and truck tyres, elevating it into the major technology league. This may become a major headache for Michelin and Bridgestone. They
already has a strong position in China, with strong OE contracts, an excellent distribution network and sophisticated marketing operations. Pirelli has a joint venture in Yanzhou, Shandong Province, which is now Pirelli's largest factory in the world. It makes car tyres, truck tyres and moto tyres.
Jim Smith of the US magazine Tire Review adds; “Despite some initial misgivings by a few observers, the deal makes sense as a defensive move by Pirelli, which saw limited ways to move the needle past being an $8 billion turnover company overshadowed by Goodyear, Michelin, Bridgestone and Conti, all with revenues exceeding $20 billion annually.
As far as the UK market is concerned things will not become
      16 Commercial Tyre Business

















































































   14   15   16   17   18