Titan to acquire Russian tire firm

ERJ staff report (TB)

By Bruce Davis, Tire Business

Moscow — Titan International Inc., together with two equity/investment firms, has agreed to invest an as-yet undisclosed sum in Voltyre-Prom, an Ekaterinburg, Russia-based agricultural and industrial tire maker, to take a “controlling” stake in the firm.

The offer, put forth by a consortium involving Russian Direct Investment Fund (RDIF), Titan and One Equity Partners (OEP), involves an “agreement in principle” with Russia's JSC Cordiant—the manufacturing venture previously known as OAO Sibur Russian Tyres—to invest in Voltyre-Prom.

The transaction is expected to be finalized in the near future.

Titan will become the managing partner of Voltyre-Prom, according to a statement released by the consortium on 19 June in Moscow. The consortium's investment will allow Voltyre-Prom to update its operations, grow its production of specialty tires for international agricultural machinery, reduce imports by shifting production to Russia and begin to explore export opportunities, the statement said.

“Titan has plans to grow its tire, wheel and track footprint in Russia and CIS countries,” Titan Chairman and CEO Maurice Taylor said, referring to the nations of the Confederation of Independent States. “It is Titan's belief that the future growth of global farming and mining lies in Russia and CIS countries.”

The consortium's statement describes Voltyre-Prom as the leading producer of agricultural and industrial tires in Russia, with a market share in agricultural tires of 43 percent and in industrial tires of 16 percent in 2012. It sells farm and OTR tires under the Tyrex brand name. The company produced about 1.35 million tires in 2012.

Cordiant CEO Dmitry Sokov said the agreement will enable Cordiant to focus on passenger and truck tire markets and includes a three-year distribution partnership, calling for Cordiant to sell Voltyre's passenger, truck and light truck tires.

RDIF is a $10 billion fund established by the Russian government to make equity investments primarily in the Russian economy, while OEP is a global private equity fund and a subsidiary of JP Morgan Chase & Co.

Kirill Dmitriev, CEO of the RDIF, said the involvement of world-class investors such as Titan and OEP “underlines the growth prospects in the Russian agricultural sector. The expertise and knowledge of our partners will help shift the production of world-class tires that currently takes place overseas to Russia.”

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