KKR to pay $500m for Warburg Alliance Tire stake – report
KKR has reportedly agreed to pay about $500 million for Warburg Pincus’ stake in Indian tire manufacturer Alliance Tire Group.
The private equity firm will buy a roughly 75% stake in the business and assume about $125 million in Alliance's debt, Reuters reported. Warburg Pincus took a 70% stake in the company in 2007 as part of a $150 million buyout with Yogesh Mahansaria, former CEO of India's Balkrishna Tyres.
KKR and Warburg Pincus were said to have signed an exclusivity agreement in March. This came after a host of prospective investors, including Advent International, The Blackstone Group and Temasek Holdings, expressed an interest in the asset when a potential deal was announced in January. At the time, KKR was thought to be pursuing an 80% stake in the company, with Warburg Pincus' interest and those of some minority shareholders on the block.
Alliance has manufacturing plants in Israel and India, as well as contract manufacturing facilities in China and Taiwan, with group sales of more than $500 million in 2012, up from $125 million six years ago. The company specializes in producing agricultural and off-road tires; a market is estimated to be worth $12 billion per year, compared to $150 billion for the car tire market.
Alliance was founded in Israel in 1950, filed for bankruptcy protection in the late 1980s and was acquired by a consortium including Bear Stearns in 1992, and went public in Tel Aviv the following year. The Warburg Pincus-Mahansaria buyout followed 14 years later.
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