Following earlier reports suggesting Sailun Company Ltd had bought two other Chinese tyre firms, Sailun representatives have confirmed that the Chinese tyre manufacturer has entered into a “framework agreement” to acquire equity in both Shandong Jinyu Industrial Co. Ltd and Shenyang Peace Radial Tyre Manufacturing Co. Ltd. The framework was agreed on 10 July 2012.
The company specifically confirmed that it will acquire a 49 per cent equity stake in Shandong Jinyu Industrial Co. Ltd. for around 200 million yuan (£20.3 million). Shandong Jinyu has capacity to produce 10 million radial passenger car tyres a year.
According to an official statement, Sailun will also buy 100 per cent of Shenyang Peace Radial Tyre Manufacturing Co. Ltd. in a transaction worth about 120 million yuan (£12.2 million). Shenyang Peace currently has an annual capacity of 1.2 million all-steel radial truck tyres.
The framework agreement is being seen as an indication of Sailun’s strategic expansion plans. According to Martin West, managing director, Sailun Tyres (Europe) Ltd, Sailun is “committed to expansion and development within the industry and has a primary focus to be at the leading edge of technical excellence.”
The latest deal follows a string of other recent initiatives including an initial public offering of share capital which raised US$100 million for capital expenditure and investment in a Vietnamese manufacturing facility, due to go on-stream in the first quarter of 2013
In addition recent European sales growth across both the passenger car and radial truck tyre sectors has reportedly led Sailun to upgrade the company’s tyre logistics strategy. To meet increased demand and to maintain service level agreements and delivery standards, a new enhanced warehousing facility was opened next to the Sailun Qingdao research, development, testing and manufacturing centre. Now this infrastructure is in place, the company is in the final stages of planning the European release of 13 Terramax CVR sizes in August.
