Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apollo Tyres Limited (APOLLOTYRE) Bought Cooper Tire & Rubber Company (CTB): Will the Tire Industry Grow Again?

Page 1 of 2

The very recent acquisition of Cooper Tire & Rubber Company (NYSE:CTB) by Apollo Tyres Limited (NSE:APOLLOTYRE) of India is proof that that the tire sector is gaining dynamism after being hit by the long recession in the automobile industry.

Cooper Tire & Rubber Company (NYSE:CTB)

With the exception of Europe, increasing auto sales around the world are starting to drive profits for tire companies again. However, not every company will profit as much as its peers from this incipient bonanza.

The acquisition and the new company’s outlook

Until the acquisition in June 12th, Cooper Tire & Rubber was the 11th-largest tire company by revenue. India’s Apollo Tyres Limited (NSE:APOLLOTYRE) paid $2.5 billion in an all-cash transaction, $35 per share. This merger agreement will combine two companies with highly complementary brands, technological know-how, and international presence to create a global leader in tire production and commerce.

Cooper Tire & Rubber Company (NYSE:CTB) and Apollo Tyres Limited (NSE:APOLLOTYRE) own a well-know brand portfolio that includes premium and mid-tier brands. Plus, the two organizations have almost no geographic overlap, which will help world coverage.

With a combined $6.6 billion in total sales, the new company will be the 7th largest tire company in the world and it is expected to generate annual value creation benefits of $80-$120.million in EBITDA.

Before the acquisition, pressure on margins was forcing Cooper Tire & Rubber Company (NYSE:CTB) to make strong efforts to reduce costs and increase efficiency. Apollo Tyres Limited (NSE:APOLLOTYRE) was experiencing sales declines in its home country, India, which accounts for 60% of the company’s revenue.

Hopefully, the new company will integrate successfully and minimize its inefficiencies.

How are other American tire companies performing?

The U.S. auto and truck industry is showing signs of recovery. This year, higher light truck sales are expected due to the revival in the housing market. This year, 15 million trucks will be sold, feeding double-digit sales growth for the big three Detroit automakers.

Titan International Inc (NYSE:TWI)

has a strong focus on sales to the agribusiness industry, responsible for 59% of net sales in 2012. Second in importance is the construction segment with 28%, which as we mentioned, is strengthening. The company’s position as an off-highway wheel provider has helped its business.

Sales improved 25% in the first quarter year-over-year, reaching $578.4 million. Gross profit grew to $96.8, a 20% of net sales. However, Titan International Inc (NYSE:TWI)’s exposure to the agricultural equipment market could put a cap on future profits. This sector might suffer cuts in new equipment expenditures forced by climate change and poor harvests. The drought in the U.S. is over, but floods in Eastern Europe remain a concern.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!