Michelin buys Quebec's Camso for US$1.45B
MONTREAL -- Michelin says it has reached agreement to purchase Quebec off-road tire maker Camso for about US$1.7 billion.
The French-based tire giant says the acquisition will create the world's largest off-the-road division.
Camso, a privately held company based in Magog, Que., has been in business since 1982 and is a market leader in rubber tracks for farm equipment and snowmobiles.
It also serves the construction market by providing tracks and tires for small heavy equipment.
Camso, which has US$976 million in annual sales, has grown by an average of seven per cent annually since 2012.
Michelin's new division will have 26 plants and about 12,000 employees, with 7,700 coming from Camso.
Michelin says Camso's 300 headquarters jobs, including 100 in research and development, along with production jobs in Quebec, will be maintained.
Camso has a manufacturing presence in emerging markets, particularly in Sri Lanka and Vietnam.
The company said a recent wave of consolidation in the industry reduced the number of possible acquisition targets.
"It was when we were looking for companies to buy that Michelin expressed an interest (in January)," Camso CEO Pierre Marcouiller told a news conference in Montreal.
Marcouiller said Camso wants to become the top player in the industry but that it would have been "very difficult" to achieve that without saying yes to Michelin's offer.
"Honestly, it may have taken an additional 10 years," he said.
The two companies said the partnership will generate annual sales of more than US$2 billion in a market that is valued at US$13 billion worldwide.
"I have rarely seen a transaction where the risks are so low," Michelin president Jean-Dominique Senard told the same news conference.