Michelin agreed to buy Camso, a Canadian producer of rubber tracks for farm equipment and snowmobiles, for US$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 US$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 US$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 per cent a year since 2012.
The deal values Camso at US$1.7 billion including net debt, Michelin said, which equals 8.3 times earnings before interest, tax, depreciation and amortization, after synergies. Michelin forecasts US$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 per cent this year, valuing the company at 18.6 billion euros ($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 labour union; Mouvement Desjardins, Canada’s biggest credit union; and three individuals.
–With assistance from Frederic Tomesco.