Apollo Tyres India
Cooper/Avon tyres bought by Apollo Tyres India
As we all probably know by now. Apollo tyres India have made yet another acquisition. Buying Cooper tyres from America, who also own Avon tyres here in Great Britain.
Some City people though are concerned. Thus, about the higher debt burden. As a result, of when the price of raw materials is increasing. So unfavorable to the tyre industry on the whole. Using borrowed money for their expansion plans..
This take over by Apollo Tyres India. Therefore, will fit into their plans to expand into the North American market. Hence, the European tyre market has been complimented. Because of the acquisition of the Dutch company Vredestein tyres. Specialising in producing a large range of winter. Of course, tyres for all vehicle types. In fact a good friend of mine from Alcar tyres in Huddersfield is a Vredestein dealer and to this point has not noticed any difference in trading, since the take over by Apollo Vredestein. It would be interesting to hear from any LinkedIn members to the contrary.
Another Cooper owned subsidiary here in the UK are Avon tyres, who are long standing players in the British tyre market, originally specialising in the motor cycle tyre market, but now covering all vehicles for their summer and winter car tyre market.
Apollo Tyres India
Indeed they are now one of the suppliers to the up and coming tyre retailer group known as Point-S, a large group of tyre retailers in other European countries and now expanding in the UK. As a foot note and an update as we all know the Apollo Tyres India/Cooper acquisition fell through and the take over was aborted. Apollo Tyres India are now strengthening their position in the British market, through Vredestein and are adding their product to the excellent Vredestein Wintrac Xtreme tyres portfolio, which is their main strength in the European tyre market.
The only problem that I can foresee in the future is that Apollo may close down some of the smaller subsidiaries such as Avon tyres, but to be honest I thought the same about Vredestein tyres and I have been proved wrong, although more and more Apollo tyres are being marketed along side of Vredestein as part of the same company and Avon may not be needed in the long run, who knows ?.
Apollo Tyres India- now have a foot hold in China
Another good move by Apollo Tyres India now gives the Indian tyre giants a foot hold in China. This is because of the Chinese factories producing tyres, that were owned by Cooper tyres, producing tyres for both Cooper and Avon, along with their British factory, here in the UK.
In my opinion this takeover by Apollo tyres is a brilliant move and you can read about the financial implications
of the buyout in the following article…
“After the Cooper Tire acquisition, concerns on Apollo Tyres India biting off more than it can chew have seen the stock nosedive 30 per cent in two days. At Rs 64, the stock now trades at a valuation of about 5.3 times its trailing 12-month consolidated earnings and about 3.5 times the likely consolidated per share earnings for FY14. Although valuations may be attractive, time may not be ripe yet for fresh exposures to the stock. The management expects the acquisition to contribute to earnings immediately. However, the huge debt burden taken on for funding the acquisition does pose a challenge”... http://www.thehindubusinessline.com/money-wise/stock-insight/apollo-tyres-tread-with-care/article4817714.ece .
Article compiled by Eric Roberts
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