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18/08/2005: "Tiger Alloy Wheels’ Steal"

JSE-listed international automotive alloy wheel manufacturer Tiger Wheels says it expects to grab 5-10% of the American original equipment alloy wheel market by the end of 2006.

OEM alloy wheels are specified by car manufacturers. Tiger Wheel’s expected increased share in this market is the result of a $24-m acquisition of a Kentucky-based large-diameter wheel plant dedicated to supplying Ford motor manufacturing plants.

Tiger Wheels already has a manufacturing facility at Auburn, Alabama.

Tiger Wheels says the acquisition – which was made by its German-based subsidiary ATS Beteiligungs GmbH – is at a large discount to the $45-m book value of the assets bought. The Kentucky business was bought from Australian-listed ION Group, which is under administration.

ATS CEO Siegfried Teichert says Tiger Wheels has committed to investing a further $16-m on more than doubling the capacity of the Kentucky plant from 600 000 to 1,4-m weels a year within the next 12 months.

“The acquisition will be funded by existing resources and long-term loans to be raised by ATS from its global bankers,” says a company statement.

Outlining the rationale behind the deal, Teichert said: "First, apart from the highly favourable financial terms, it would have taken many years for our Alabama plant to achieve a reasonable market share in Detroit - the vehicle manufacturing capital of the US. Second, Kentucky provides the opportunity for Tiwheel to obtain a meaningful share of the large diameter wheel market from a site close to major US motor manufacturers.

“What is more, it enables us to further expand the high-tech process efficiency developed in Germany into the US wheel manufacturing environment and, at the same time, to bring into our fold a wheel production team with a wealth of
experience and a depth of knowledge of the North American wheel market."

(this article was taken from moneyweb.co.za)