A non-binding bid for South Korean tyre company Kumho Tire has been made by one of India’s largest tyre manufacturers, Apollo Tyres, according to its Managing Director, Neeraj Kanwar.
However, Apollo Tyres still doesn’t know the specifics of the process yet. Although they do know that the South Korean tyre maker is a good brand, specifically in Asia, and it has heavily invested in the US, which is a good market to be in, said Kanwar.
He also added that they still have a long way to go to get to the data and to determine if Kumho is a good fit for Apollo.
Also given the political instability in South Korea, Kanwar is expecting some delays in the process.
If the deal pushes through, it would be the first major acquisition by Apollo Tyres since its bid for US-based Cooper Tire failed because of the reservations of the joint venture partner in China.
The acquisition would help advance Apollo Tyres’ international expansion strategy, giving the company a foothold in South Korea as well as in the car, truck and SUV sectors in the US, a market in which it has long planned to expand into.
Kanwar said that independent of the bid, the company already had plans to grow its business in the US, focusing on expanding the portfolio of products it offered with plans of setting up a manufacturing facility in the long term.
While India accounts for 60% of portfolio, Kanwar hopes that international operations will gradually represent an increasing share, with Europe accounting for around 50% next year once its new factory in Hungary becomes operational.
Kanwar said that they will hopefully see double digit volume growth next year in Europe and India. HE also added that between 2017 and 2020, a lot of top cars in Europe will have the Vredestein brand tyres, which is a Dutch tyre maker Apollo has acquired in 2009.
Kanwar remains optimistic about market sentiment in Europe, despite Brexit, driven by growth in demand for its premium and specialist tyres in its main market, Germany.
“Coming to the UK, yes it’s a dampener but we don’t manufacture here so it doesn’t have a huge impact. Of course, we do import tyres to the UK so it could have an impact but it’s too early to say.”