France-based tire producer Michelin tightens its grip on Indonesia market by buying as much as 7.3 billion shares that equals with 80% shares of publicly listed national tire manufacturer PT Multistrada Arah Sarana Tbk (MASA). Both companies announced the transaction that worth $439 million on January 22.
“The acquisition of Multistrada represents an excellent opportunity for Michelin to expand its operation in Indonesia, the most populous country in Southeast Asia, and immediately gain competitive good-quality production capacity without having to create any new manufacture facility,” says CEO Michelin Group Jean-Dominique Senard.
Michelin will gradually shift the current Multistrada’s passenger car tire production, which is still on Tier 3, to match with its brands that are categorized as Tier 2. There are three tiers used for categorizing tire based on the price, market and manufacturer profit margin, with Tier 1 stands as the most premium category.
Through this acquisition, the France manufacturer is also going to own 20% stocks of automotive retail company PT Penta Artha Impressi, a subsidiary of Multistrada, to boost its sales and marketing. The cooperation in manufacturing, sales and marketing is expected to bring up to $70 million for Michelin Group within three years after the acquisition.
Multistrada is the leading tire manufacturer in Indonesia with a total production capacity of more than 180 thousand tons at its factory in Cikarang, West Java. It booked net sales of $281 million in 2017 by producing tiers for motorcycles, passenger cars and trucks. The company stated that it has valuation of $700 million, including the 20% stake in PT Penta and 50 hectares of available land.
“We are very proud of what we achieved with Multistrada and we are confident Michelin is the ideal partner to take Multistrada forward into a new era of growth and success for the benefit of all stakeholders and employees,” says Multistrada President Director Pieter Tanuri.