Cooper Tire & Rubber Company (CTB) has decided to fully own the China-based Cooper Kenda Tire (“CKT”), which will cease to have a 50-50 joint venture. In this regard, an agreement has been reached with the concerned parties and the deal is to be finalized by March 15, 2011. The transaction will be worth $116.5 million.
CKT was formed in 2007 as a 50-50 joint venture between Ohio-based Cooper Tire and the Kenda Tire Company of Taiwan. Cooper Kenda is based in Kunshan, China and currently manufactures a variety of passenger car and light truck tires for export to North America and Europe. Alongside, the facility is also well positioned to serve the domestic entry-level tire market.
With the acquisition, CKT will be renamed as Cooper Kunshan Tire. The company is well focused to capitalize on the global opportunities with the new acquisition.
Almost all the tire companies worldwide are keen to make large investments in China mainly due to the country’s organized tire industry, huge demand and more importantly, abundance of cheap energy and labor resources. China has retained its top position in tire exports since 2004.
Cooper Tire & Rubber Company is a global company specialized in the design, manufacture, marketing and sales of tires used in passenger cars and light trucks.
During 2010, the company’s profit increased about threefold to $140.4 million or $2.24 per share from $51.8 million or $1.02 per share in 2009. However, the cash balance as of December 31, 2010 slightly deteriorated to $413.4 million from $427.0 million during the corresponding period in 2009.
Apart from increasing ownership in Kunshan, Cooper Tire has planned massive restructuring in each of its tire plants in order to improve their production level. At the same time, it has also planned an upgradation in production capacity at its Texarkana plant along with expansion of manufacturing facilities in Arkansas and Mississippi in the U.S. and Guadalajara of Mexico.
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