Amtel-Vredestein poised to take over Moscow Tyre Plant

Moscow - Amtel-Vredestein NV has agreed to acquire Moscow Tyre Plant (MTP) through its Russian subsidiary Amtel-Vredestein OJSC, subject to approval from the Russian State Anti-Monopoly Committee.

The Dutch tyre producer, the fourth largest in Europe, aims to take control of the 60-year-old company on 1 Aug and bring the facility to full capacity of 2.2 million tyres per year, from the current 30 percent, immediately.

Amtel-Vredestein expected MTP to earn between $66 million and $88 million a year at full capacity.

While final terms of the deal have not yet been finalised, Amtel-Vredestein said it expected to take on debt to finance the acquisition.

''By acquiring the Moscow Tyre Plant, we will gain essential production capacity to meet the growing demand for our brands in Russia,'' Amtel-Vredestein chief executive Alexei Gurin said.

The tyremaker currently operates a facility in Voronezh, Russia, which it now plans to expand by the end of 2007.

The MTP plant in Dubrovskaya, which produces the popular Taganka tyre brand, was modernised in 2004 and 2005 through a $40 million joint venture with Germany's Continental AG.

''Amtel-Vredestein will reduce the overall footprint of the plant to retain just the smaller, more modern facility - a significant cost saving measure that will optimise production and minimise costs for power, maintenance, payroll, etc,'' the company said in a statement.

The older premises will be managed by Amtel-Vredestein until December 2007, after which time the Moscow municipal government will take control and redevelop the site.

Amtel-Vredestein also agreed with the Moscow government to shut down the rubber mixing facility at MTP in 2007 for environmental reasons and ship pre-mixed compounds from its Voronezh complex.

The Dutch tyremaker said it had not yet made a decision on whether it would continue to produce MTP's current brands.