CGS buys Rumaguma plant from GPX

ERJ staff report (DS)

Prague, Czech Republic -- The CGS Group of the Czech Republic has agreed to buy the Rumaguma tyre manufacturing facility in Serbia from GPX International. Terms were not disclosed. The CGS Group will integrate this production plant for agricultural and industrial tyres into its tyre division operated by Mitas a.s. The acquisition is part of the CGS Group strategy focusing on the agricultural and industrial tyres business and will further support its second position in the segment of agricultural tyres in Europe.

The integration of Rumaguma into the CGS Group is expected to be finalised in the second half of September 2008, pending approval of the deal by the Serbian trust authorities. Rumaguma will become the fourth Mitas a.s. tyre plant, will significantly increase overall capacities and support optimisation of production programs between the plants.

Mitas said it is currently investing heavily in its existing plants in the Czech Republic to convert them to radial construction tyres. The company expects to transfer cross-ply production to the Serbian unit. Once the upgrades in Czech Republic are complete, Mitas intends to add radial capacity at Rumaguma.

Along with the sale of Rumaguma plant, GPX agreed to transfer its business of the Galaxy tyre brand in Central and Eastern Europe to CGS. CGS also confirmed its readiness to continue production of selected tyres for GPX under an off-take agreement for a certain period of time. Both parties are willing to further explore possibilities for mutual cooperation in various other fields.