RONGCHENG, Shandong – Chengshan Group Co., Ltd. (Chengshan) declared on October 8 that it will acquire Cooper’s 65 percent ownership stake in Cooper Chengshan (Shandong) Tire Co., Ltd. (CCT) for $250 million, according to a company news release.
Cooper is currently reviewing the notice and documentation provided by Chengshan to confirm that all of the requirements under the August 14 option agreement have been met.
“Delivery of the exercise notice is one of several steps necessary prior to any transaction,” said Roy Armes, chairman, CEO and president of Cooper. “Cooper is committed to meeting the needs of our customers and continuing to grow in China. Should the process of resolving the ownership of CCT result in Chengshan acquiring our interest in the joint venture, a commercial offtake agreement is in place under which CCT is required to produce Cooper brand products – including Roadmaster truck tires – through mid-2018. The purpose of the offtake agreement is to assure a secure supply of Cooper brand products while also giving us the flexibility to enter into acquisitions, new offtake relationships, or possible greenfield development of additional production capacity anywhere around the world to support the continued expansion of our business.”
“China is a core growth market for Cooper and we have a strong track record of success in the region. To support our strategic plans there, we expect to continue to invest in our sales and marketing organization, our rapidly growing distribution network, and the strong technology capability we have in place,” Armes continued. “In addition, we expect to continue to invest in our wholly-owned Cooper Kunshan Tire operation, which is a world-class tire production facility with room to expand. We look forward to final resolution of the ownership of CCT as we continue to pursue our global growth objectives.”
This move marks an end to 8-year-long cooperation between the two groups. The JV has been Cooper’s largest production base outside the U.S. and is capable of manufacturing 1,500 radial tires per year for trucks, buses and passenger cars.
Under the agreement, Chengshan will continue to produce tires for Cooper after the acquisition.