Trelleborg has finalized the SEK 10.9 billion deal through which it acquired CGS Holding a.s., a Czech based company that specializes in agricultural, industrial and specialty tires as well as engineered polymer solutions. CGS had generated revenues of SEK 5.6 billion in 2015 and had an operating margin of 16.5 percent.
Speaking about the deal, Peter Nilsson, President and CEO of Trelleborg said that CGS will be a welcome addition to the Trelleborg Group. Through the acquisition, Trelleborg will be able to almost double its sales of agricultural tires, and fortify its position as a frontrunner in industrial tires while adding a new range of specialty tire segments. CGS’s engineered polymer solutions pision will not only add an interesting new product line but will also strengthen Trelleborg’s existing leading positions in many business areas.
CGS Holding is the holding company for Mitas, Rubena and Savatech. Mitas accounts for the bulk (two-thirds) of the group’s sales and has strong mid-market specialty tire brands, especially when it comes to agricultural tires. These specialty tires are complemented by Rubena’s and Savatech’s niche engineered polymer solutions businesses, which covers seals, sealing profiles, specialty molded products, printing blankets and other engineered fabrics.
Peter Nilsson went on to add that he had a strong conviction that the agricultural market will recover, thus enabling Trelleborg to benefit from the synergies of the deal in light of the expected recovery of the agricultural market.
Mitas will be integrated as part of the Trelleborg Wheel Systems business area while other companies belonging to the CGS Group will maintain their independent status before being gradually integrated into current business areas. Post acquisition, Trelleborg will have sales of about SEK 30 billion, with a workforce of 23,000 employees spanning 47 countries.
The merger between the two companies has been consolidated from May 31, 2016 and the non-recurring acquisition related costs of approximately SEK 70 million will be charged to the second quarter of 2016. Of this amount, about SEK 50 million will be charged against reported operating income and about 20 million will be charged to net financial items.
Manju Mathew, an MBA in marketing, completed publisher training courses from the Oxford Brookes University and New York University. She started with marketing and PR roles before moving on to her current position as a full time writer. Currently living in Dubai, her life as an expat has sharpened her observation skills and flair for writing. She enjoys writing about luxury cars like Ferrari, Lamborghini, etc even if she can only dream of owning them.
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