Cooper Tire to acquire majority interest in China JV

Cooper Tire & Rubber Company, a global tire design, manufacturing and marketing company, has entered into an agreement to purchase a majority of China-based Qingdao Ge Rui Da Rubber Co Ltd (GRT). Cooper will own 65 percent of the entity, which will be renamed Cooper Qingdao Tire Co Ltd (CQT), for approximately 600 million RMB or $93 million USD including the acquisition and initial investments in the operation. The transaction is expected to close during the first half of 2016 pending certain permits and approvals by the Chinese government.
CQT is expected to serve as a global source of truck and bus radial (TBR) tire production for Cooper including Roadmaster brand tires for the North American market as well as TBR tires for Asia and other markets. Passenger car radial (PCR) tires may also be manufactured at the facility in the future. It is estimated that at full capacity, CQT will be capable of producing approximately 2.5 million to 3 million TBR tires annually and nearly the same number of PCR tires within the existing one million-square-foot production facility, with room for further expansion at the location.
GRT is located north of Qingdao in northeast China and currently employs approximately 600 workers. It was established in 2014 after Qingdao Yiyuan Investment Co Ltd (QYI) purchased the assets of the then idle facility. QYI’s founder, Executive Director and General Manager is long-time tire industry veteran Li Zhihua, who is also a professor at Qingdao University of Science and Technology. QYI has established production at GRT with an initial focus on TBR tires and has put in place an experienced management team backed by a skilled workforce with extensive tire industry expertise.
“Cooper is excited to take this positive step to secure additional TBR tire supply and further our Asia growth strategy,” said Brad Hughes, Cooper’s Chief Operating Officer. “After a comprehensive review of options, we are pleased to have reached this agreement, which meets our goal of finding a new source of high quality, cost competitive TBR tires for North America and Asia. As we have previously stated, achieving our goals for growth will likely require a series of actions and today’s announcement is certainly a significant one,” Hughes concluded.
“The team at GRT is very impressive with deep industry and technical knowledge,” said Cooper Chairman, Chief Executive Officer and President Roy Armes. “There’s a strong workforce, facilities that we can continue to expand with further capital, and a management team that is focused on the current opportunity in TBR tires as well as our wider growth plans for Asia. This is a great strategic fit within our existing and highly productive worldwide manufacturing network and will allow us to further optimize our global footprint. We welcome the GRT team to the Cooper family and look forward to many years of success together in the future as CQT.”
Li Zhihua said: “After a lengthy evaluation process to identify the best partner, we are pleased to team up with Cooper, a global tire industry leader with a 100-year heritage of success. We look forward to working with Cooper to maximize the opportunity we have together to drive continued innovation and expand manufacturing of quality TBR tires and other products.”
Upon closing, CQT will join seven other tire manufacturing facilities in the Cooper family of companies with three U.S. plants in Findlay, Ohio; Texarkana, Arkansas and Tupelo, Mississippi, as well as facilities in Kunshan, China; Melksham, England; Krusevac, Serbia and a joint venture plant near Guadalajara, Mexico.