Michelin to acquire Quebec farm-tire maker Camso for US$1.45B
PARIS French tire-maker Michelin is bolstering its specialty business with a Us$1.45-billion deal to buy Camso, a Quebec-based producer of rubber tracks for farm equipment and snowmobiles.
The two companies’ off-road operations will be combined and run from Camso’s headquarters in Magog, Que., Michelin said in a statement Thursday. Closely held Camso, which also makes tires for material-handling equipment, has sales of US$1 billion.
“The specialty-tire market is by far the fastest-growing,” Michelin chief financial officer Marc Henry told reporters by phone, putting growth at around four per cent a year. “This merger is a perfect fit for Michelin and Camso.”
Michelin’s stock rose as much as 2.5 per cent after the news. It has fallen 13 per cent this year.
The deal is Michelin’s second acquisition this year worth more than US$1 billion and aimed at diversifying the Clermont Ferrand, France-based company away from car and truck tires.
The French manufacturer’s agreement in March to buy U.k.based conveyor-belt maker Fenner Plc for about US$1.6 billion will strengthen its presence in mining equipment.
Camso ranks among the top three companies in making tracks and tires for construction equipment, Michelin said. The company, which has a manufacturing site in Sri Lanka, has grown at an average of seven per cent a year since 2012.
The deal values Camso at US$1.7 billion including net debt, according to the statement, which equals 8.3 times earnings before interest, taxes, depreciation and amortization, after synergies. Michelin forecasts the deal will generate US$55 million of cost savings and increased sales by 2021.
The French company agreed to keep Camso’s 300-strong headquarters in Quebec, and doesn’t see major job cuts in France as a result, Henry said. The accord would likely close by year’s end, probably by end of November, he said.
Shareholders in Camso include Caisse des Depots et Placements du Quebec, Canada’s second-largest pension fund manager; Quebec’s Solidarity Fund QFL, which is backed by a labour union; Mouvement Desjardins, Canada’s biggest credit union; and three individuals.