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Bibendum, also known as the Michelin Man

Michelin to Acquire Farm-Tire Maker Camso for $1.45 Billion

July 12, 2018
The acquisition is the second deal of more than $1 billion announced by Michelin this year.

Michelin agreed to buy Camso, a Canadian producer of rubber tracks for farm equipment and snowmobiles, for $1.45 billion as the French tiremaker bolsters its specialty-equipment business.

The two companies’ off-road operations will be combined and run from Camso’s headquarters in Magog, Quebec, Michelin said in a statement Thursday. Closely held Camso, which also makes tires for material-handling equipment, has sales of $1 billion.

“This acquisition is a wonderful mutual opportunity,” Michelin Chief Executive Officer Jean-Dominique Senard said in the statement. “Michelin will benefit from all of Camso’s skills in the off-the-road mobility markets and Camso from the full range of Michelin’s expertise in the specialty markets.”

The acquisition is the second deal of more than $1 billion announced by Michelin this year, and both of them diversify the Clermont Ferrand, France-based company away from car and truck tires. Michelin agreed in March to buy U.K.-based conveyor-belt maker Fenner Plc for about 1.2 billion pounds (US$1.6 billion), strengthening the buyer’s presence in mining equipment.

Camso ranks among the top three companies in making tracks and tires for construction equipment, Michelin said. The company, which has a manufacturing site in Sri Lanka, has grown at an average of 7 percent a year since 2012.

The deal values Camso at $1.7 billion including net debt, Michelin said, which equals 8.3 times earnings before interest, tax, depreciation and amortization, after synergies. Michelin forecasts $55 million of cost savings and increased sales by 2021.

Michelin also doubled its estimate of synergies from the Fenner acquisition to 60 million pounds, the company said Thursday.

Michelin shares have fallen 13% this year, valuing the company at 18.6 billion euros (US$21.7 billion).

Shareholders in Camso include Caisse de Depot et Placement du Quebec, Canada’s second-largest pension fund manager; Quebec’s Solidarity Fund QFL, which is backed by a labor union; Mouvement Desjardins, Canada’s biggest credit union; and three individuals.

By Ania Nussbaum, with assistance from Frederic Tomesco.

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