March 25, 2022

The Yokohama Rubber Co., Ltd. Announced to Acquire Trelleborg Wheel Systems (TWS), a Swedish Company

Photo from Trelleborg website https://www.trelleborg.com/en

On March 25, the Yokohama Rubber announced to acquire TWS, a leading global supplier of tires and complete wheels for off-highway vehicles and specialty applications. The acquisition, worth approximately 270 billion yen, is the largest ever for the Yokohama Rubber. Competition for passenger car tires is intensifying with Chinese and Korean competitors, and Yokohama Rubber will accelerate its shift to the industrial sector, which is expected to generate stable earnings.

Yokohama Rubber will acquire all shares from Trelleborg, the parent company of TWS, which deals in sealing materials and other products. The acquisition is expected to be completed between July and December 2022, after proceeding in accordance with the competition laws of the European Union and other countries.

The Yokohama Rubber acquired Alliance Tire Group (ATG), a Dutch agricultural tire manufacturer, in 2016 for approx. 130 billion yen. This is the largest acquisition since ATG. President Masataka Yamashita stressed “The acquisition will increase our lineup of agricultural machinery and strengthen our cost competitiveness" according to an online press conference held on the same day.

The Yokohama Rubber is the third largest tire company in Japan in terms of sales after Bridgestone and Sumitomo Rubber Industries. For passenger cars, there is a large difference of sales with Bridgestone and others. According to data from Global Information, QY Research in 2020, Bridgestone leads in global automotive tire sales with a 14% share. Chinese and Korean players, including sixth-placed Hankook Tire (6%), are in hot pursuit with their low-priced offensives. The Yokohama Rubber, which ranked 8th with 4%, has long indicated a policy of strengthening its industrial and corporate business.

Agricultural machinery applications are less susceptible to economic fluctuations than passenger car applications. ATG is strong in North America and Asia, while TWS is mainly in Europe. With this acquisition, the Yokohama Rubber's agricultural tire business will become one of the largest in the world. Yokohama Rubber is probably aiming to increase their presence in the niche market for agricultural machinery, where demand is firm. It is also assumed that they are aiming to incorporate the target company's technology.