French tire manufacturer Michelin has agreed to acquire Indonesian counterpart Multistrada Arah Sarana for $439 million to strengthen its presence in Southeast Asia’s largest market.
In an official statement, Michelin said it will acquire 80 per cent of Jakarta-based Multistrada. It is understood that the company plans to launch a tender offer to buy the remaining shares in Multistrada, which is a publicly traded unit of conglomerate Salim Group.
Multistrada, which produces radial tire for two-wheeled vehicles (Corsa) and four-wheeled vehicles (Achilles), boasts a production capacity of more than 180 thousand tons and reported net sales of $281 million in 2017.
“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 Michelin Group CEO Jean-Dominique Senard.
Through the transaction, Michelin says it will also acquire a 20 per cent stake in local retailer Penta Artha Impressi in partnership with automaker Indomobil and private investors to boost the marketing and sales of Michelin Group brands in Indonesia.
Michelin said that Multistrada, including the 20 per cent stake in Penta and 50 hectares of available land, has been valued at $700 million, representing 6.3 times EBITDA for the 12 months ended September 30, 2018.
Meanwhile, potential synergies in manufacturing, sales and purchasing are expected to represent up to $70 million per year within three years of the acquisition, the firm said.
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