CEAT, an RPG company and Michelin, the global leader in tyres, announced recently that they have entered into a definitive agreement for the tyre company to acquire Camso brand’s Off-Highway construction equipment bias tyre and tracks business from Michelin in an all-cash deal valued at about $225Mn.
The transaction will include the business with revenues of around $213 Mn for CY 2023 and global ownership of the Camso brand along with two state-of-the-art manufacturing facilities.
The brand is a premium one in construction equipment tyres and tracks with strong equity and market position in EU and North American aftermarket and OE segments. The brand will be permanently assigned to the company across categories after a 3-year licensing period. This will expand the company’s product portfolio in the high-margin Off-highway tyres (OHT) and tracks segments, which include agriculture tyres and tracks, harvester tyres and tracks, power sports tracks and material handling tyres.
Michelin will thus exit from the activities related to Compact Line bias tyres and Construction tracks.
The acquisition is a significant milestone for the company in its ambition to become a leading global player in the high-margin OHT segment. Over the last decade, the company has been focusing on building its OHT business, which now consists of 900+ product offerings and covers around 84% of the range requirement in the agricultural segment.
The brand will give CEAT the ability to widen its product base into tracks and construction tyres. More importantly, it will give the company access to a global customer base including over 40 international OEMs and premium international OHT Distributors.
The company brings in the ability for the brand to expand to other segments such as agriculture tyres. Both brands are highly complementary in their positioning and capabilities. Both CEAT and Michelin are committed to a coordinated and smooth transition for customers, suppliers and all employees. The manufacturing facilities being acquired are located in Sri Lanka.
Anant Goenka, Vice Chairman, RPG Enterprises said, “This acquisition has a significant strategic consequence for CEAT as it catalyzes the company’s journey towards being a leading tyre maker globally. Camso is an industry-leading brand in the Off-Highway Tyre market built through many years of investment in creating product superiority and manufacturing excellence, nurtured through the Michelin parentage. Most importantly, we found a great cultural alignment between Camso and CEAT because of our TQM way of working.”
Arnab Banerjee, MD & CEO, CEAT said, “The Camso brand is an excellent fit with the growth strategy of CEAT’s Off-Highway Tyre business, thereby improving our margin profile. Access to the most premium customers, a high-quality brand and a qualified global workforce is what excites us the most about this acquisition.
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.”
Michelin, Beyond Road Business Line Senior Vice President Nour Bouhassoun said, “Michelin firmly believes that CEAT is the right fit to carry on our bias tyres and tracks for 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.”
