Japanese tyre and rubber company Sumitomo Rubber Industries has announced its plans to acquire Britain’s second-largest car tyre distributor Micheldever Group in a deal worth around £215 million (US$266 million) as it aims to expand the sales of its Falkentyre brand in Europe.
The acquisition is also the latest in a string of post-Brexit deals, making Japan Asia’s most aggressive buyer of UK assets. The move by Sumitomo, the world’s sixth-biggest tyremaker by revenue, would put Britain’s top two tyre distributors in Japanese hands, after trading house Itochu acquired rival Kwik-Fit for £637million in 2011.
Micheldever, a tyre wholesaler and retailer, directly operates roughly 1,000 stores and sells about 6 million tyres annually. Though sales totaled around £320 million for the year ended in March 2016, the company recorded a net loss of about £4.75 million with negative net assets of £46.54 million.
By the end of February, Sumitomo Rubber will acquire all outstanding Micheldever shares. The UK’s Graphite Capital Management owns a 62.7% stake.
Sumitomo Rubber will use its Turkish plant launched in 2015 to produce Falkentyres, known for long life and high traction, for the UK market. While expanding its tyre sales, the Japanese company also aims to rebuild Micheldever’s business.
Since the end of Sumitomo Rubber’s 16-year alliance with Goodyear in 2015, the Japanese company has worked solo to expand Falken sales worldwide. In Europe, Sumitomo Rubber long relied on Goodyear for tyre production and sales, and gave Goodyear the license for Dunlop tyres in Europe when the partnership ended.
Sumitomo has stepped up overseas acquisitions over the past two years as it aims to increase its annual revenue.
The Japanese company agreed to purchase the rights to UK sportswear brand Dunlop from Sports Direct for US$137.5million last month, and bought Swiss rubber parts manufacturer Lonstroff Holding for US$43 million in 2015.
For Graphite, the £215 million sale of Micheldever would represent a return of around 3.7 times its original investment made in 2006.
The private equity fund has been seeking a buyer for the UK tyre wholesaler and retailer for several years, following a failed attempt in 2010 to sell the company to Japanese trading house Marubeni, the European distributor of Yokohama tyres.