France-based Michelin has announced reaching an agreement with Magog, Quebec-based Camso to acquire the firm’s off-the-road (OTR) tire and tread operations and form a new, combined division to be managed from Quebec.
“Led by a set of common values and a strong tradition of innovation and R&D (research and development) 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,” Michelin states in a mid-July news release.
Reporting net sales of $1 billion (in United States dollars), Camso has been designing, manufacturing and marketing OTR tires and treads since 1982. Michelin describes Camso as a market leader in rubber tracks for farm equipment and snowmobiles, and in solid and bias tires for material handling equipment. Camso also ranks among the top three players in the construction market, providing track and tire products for small heavy equipment, according to Michelin.
“Leveraging its technological leadership in tracks and related systems, its competitive manufacturing footprint, particularly in Sri Lanka, and strong customer awareness of its Camso and Solideal brands, Camso has demonstrated its ability to grow rapidly, expanding at an average pace of 7 percent per year since 2012,” states Michelin.
“Michelin and Camso have many values in common,” remarks Jean-Dominique Senard, CEO of Michelin. “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.”
Pierre Marcouiller, executive chairman of Camso, says, “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. 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.”
Michelin states it has made the following commitments in terms of its future presence in Quebec:
- the OTR division’s decision-making center will be based at Camso’s headquarters in Magog and the management teams, including the top executive, will work out of the Magog office;
- headcount at Camso headquarters (300 employees, of which 100 are in R&D) will remain stable, and existing R&D operations and production jobs in Quebec will be maintained; and
- any new “skill sets” required to oversee the sector, and the anticipated growth in the division’s net sales, will lead to the creation of new jobs in the Magog region going forward.
After obtaining shareholder and government agency approvals, Michelin indicates it will acquire Camso for $1.45 billion, corresponding to an enterprise value of $1.7 billion, based on a multiple of 8.3 times EBITDA (earnings before interest, taxes, depreciation and amortization), “after synergies,” according to Michelin.