Michelin Buys Camso in in $1.45 Billion Industrial Tyre Sector Shake-Up
16th July 2018
Michelin and Camso today reached an agreement whereby Michelin will acquire Camso, headquartered in Magog, Quebec, Canada, and whereby the two companies’ off-the-road (OTR) operations will be combined to form a new division to be managed from Quebec. The deal has been valued at $1.45 billion.
An official press release stated: “Led by a set of common values and a strong tradition of innovation and R&D at both Michelin and Camso, and backed by high-quality teams, the strategic partnership makes the newly created entity the world leader in OTR mobility.”
The statement continued: “In the material handling equipment market, Michelin will leverage Camso’s renowned SOLIDEAL and CAMSO brands to become the market leader in solid tyres. The deployment of the new entity’s offer will be accelerated by the complementarity of both Michelin and Camso’s distribution networks.”
Jean-Dominique Senard, Chief Executive Officer of the Michelin group, said: “Michelin and Camso have many values in common. This acquisition is a wonderful mutual opportunity. Michelin will benefit from all of Camso’s skills in the off-the-road mobility markets and Camso from the full range of Michelin’s expertise in the specialty markets.”
“Joining up with Michelin’s off-the-road teams is a fantastic opportunity for Camso because of the similarity of our cultures as well as our growth potential,” said Pierre Marcouiller, Executive Chairman of Camso. “Camso will achieve its ambition to become the global off-the-road market leader and will contribute its dynamic teams, its technical and manufacturing assets and its customer-focused mindset. The transaction has received the backing of all Camso’s shareholders.”
Through studies and discussions with Camso, Michelin has identified significant opportunities to increase sales and reduce costs, thereby unlocking up to US$55 million in synergies by 2021. After obtaining the customary approvals, Michelin will acquire Camso for US$1.45 billion, corresponding to an enterprise value of US$1.7 billion, i.e., a multiple of 8.3 times EBITDA* after synergies. The transaction will not impact the Group’s robust financial position.
As part of the transaction, Michelin has made the following commitments:
The OTR division’s decision-making centre will be based at Camso’s headquarters in Magog. The management teams, including the top executive, will work out of the Magog office.
Headcount at Camso headquarters (300 employees, of which 100 in R&D) will remain stable, and existing R&D operations and production jobs in Quebec will be maintained.
The new skill sets required to oversee this global business, and the anticipated growth in the division’s net sales, will lead to the creation of new high-quality jobs in the Magog region in the coming years.
With this transaction, the Michelin Group is confirming its strategic commitment to expanding in the tyres and services domains while rolling out its strategy in materials and distribution. Michelin also indicates that, following a thorough analysis, the synergies expected to result from the Fenner acquisition have been revised upward, to £60 million from the initially announced £30 million.