Michelin to buy Fenner for $1.7bn

French tyre maker Michelin SCA plans to buy British engineering company Fenner Plc for £1.2 billion ($1.7 billion) so that it can serve mining companies better and benefit from an industry recovery.

The mining sector is beginning to invest in new projects and to cautiously expand production as it recovers from a deep commodity markets crash in 2015-16, increasing the amount it spends on new equipment on expansion in minerals such as copper and those used to make batteries.

Michelin has offered 610 pence in cash for each Fenner share, representing a more than 30% premium to the British company’s closing price of 466.6 pence on Friday.

“Fenner’s directors intend to unanimously recommend its shareholders vote in favour of the acquisition at a meeting in May,’’ the French firm said.

“The acquisition will enable Michelin to accelerate its growth in this (high-technology materials) area, and to strengthen its position as a key player in the recovering mining markets,” Michelin CEO JeanDominique Senard said.

“It will combine Michelin’s mining tyre and Fenner’s conveyor belt businesses to provide a comprehensive offering to mining customers,” he told investors.

The two firms would also combine their reinforced polymer business.

Fenner, best known for its heavy conveyor belts and reinforced polymer technology, was founded in 1861 and its early products included leather belting for use in power transmission, lacing and hoses.

The company, which reported £655 million in revenue in 2017, also supplies engineered rubber-based products to mining and industrial markets.

Michelin, which expects the deal to add to its earnings in the first full year after completion, said it would benefit from Fenner’s access to Latin America and Asia.

It does not intend to dispose of any “material part” of Fenner’s business and does not expect any job cuts, but would look to delist the British firm from the London Stock Exchange.