Pirelli, JV partner to buy Russian tyre plant

ERJ staff report (TB)

Milan, Italy -- Pirelli & C. S.p.A. and Russian Technologies State Corp. are enlarging the scope of their 13-month-old cooperation agreement to include the acquisition of an existing Russian tyre plant.

Pirelli and Moscow-based Russian Technologies formed a joint venture in November 2008 to oversee the construction of a car and truck tyre and steel cord plant in Russia's Samara region. That project was valued at $430 million.

The parties said now they are evaluating a purchase from among “some potentially interesting Russian enterprises.” They anticipate making a purchase next year.

Pirelli Tyre CEO Francesco Gori presaged the announcement two weeks ago in a conference call with stock analysts.

Pirelli Chairman Marco Tronchetti Provera and Russian Technologies Director General Sergey Chemezov signed the expanded agreement today at a ceremony attended by Russian President Dmitry Medvedev and Italian Prime Minister Silvio Berlusconi.

The parties did not identify any of the plants they are targeting. Pirelli, however, already is involved with one other project, supplying mixing technology to tyre maker Nizhnekamskshina.

Also, the bankrupt Amtel company is known to be seeking buyers for its assets, including the recently-built Voronezh II passenger car tyre factory.

The joint venture partners' new factory will be built in the Togliatti industrial technology park in Samara. The partners said they are waiting for Russian authorities to make a decision on a site or sites for production of automotive components; they expect a decision by the second half of 2010.

The new factory will be built in two phases, Pirelli said, starting with a factory for radial commercial vehicle tyres followed by a factory for steelcord. At full annual capacity of more than 4 million tyres, the industrial hub will employ about 1,500, Pirelli said.

From Tire Business (A Crain publication)