KKR to exit Alliance Tire to Japan's Yokohama

The deal will see Yokohama buy all of Alliance's shares, and is expected to be finalized on July 1. KKR has been an investor in Alliance since 2013, when it bought a controlling stake from Warburg Pincus. AVCJ Research reported the deal to be worth $522 million, with KKR acquiring an 87% holding in the company. Alliance's other backers include the International Finance Corporation.

KKR's purchase included about $200 million in debt funding, which was later refinanced to $300 million, according to Debtwire. Lenders included Crescent Capital and Babson Capital. It is believed that the firm will see a return of around 3x.

Alliance specializes in the manufacture and sale of tires for agricultural, industrial, construction and forestry machinery. Its products are sold in 120 countries, with a particular focus on the North American and European markets.

Yokohama, which does not currently produce or sell tires for agriculture or forestry applications, plans to use the acquisition to strengthen its commercial product lineup, according to a statement. It expects demand for agricultural machinery to increase along with food demand by the rising world population.

Alliance was founded in Israel in 1950, was acquired by a consortium including Bear Stearns in 1992, and went public in Tel Aviv the following year. Warburg Pincus bought the company in 2007 in partnership with Yogesh Mahansaria, former CEO of India's Balkrishna Tyres. Mahansaria retained partial ownership after the KKR buyout.

Currently the company is headquartered in the Netherlands; it has two factories in India and one in Israel, in addition to R&D facilities in Israel, India, the US and South Africa. For 2015 it reported annual sales of $529 million and operating profit of $95 million.

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• Topics
• South Asia
• Industrials
• Trade sale
• Buyouts
• GPs
• India
• KKR
• manufacturing