Bridgestone Americas Holding Inc. and Bandag Inc. announced today that they have entered into a merger agreement where Bridgestone Americas will acquire the outstanding shares of each class of stock of Bandag for $50.75 per share in cash.
The transaction is valued at approximately $1.05 billion.
The board of directors of Bandag has unanimously approved the agreement. The transaction is expected to close late in the first quarter or early in the second quarter of 2007, subject to the receipt of shareholder and regulatory approvals, as well as the satisfaction of other customary closing conditions.
Bandag is a leading manufacturer of tire retreading materials and equipment. Based in Muscatine, Iowa, Bandag has a global network of more than 900 franchised dealers that produce and market retread tires and provide tire management services. In addition, Bandag owns and operates Tire Distribution Systems, Inc., a commercial retail operation that sells and services new and retread tires, and it holds an 87.5 percent interest in Speedco Inc., a provider of on-highway truck lubrication and routine tire services to commercial truck owner-operators and fleets.
In 2005 Bandag had worldwide sales of US$921 million. Following completion of the transaction, Bandag will operate as a wholly owned subsidiary of Bridgestone Americas Holding Inc.
“Bandag is a leader in the retreading business, with a strong global reputation for quality, service and technology, as well as an extensive worldwide dealer network,” said Mark A. Emkes, chairman and CEO of Bridgestone Americas Holding Inc. “The joining of Bridgestone Americas and Bandag will allow the two companies to better service their customers by offering a comprehensive tire maintenance solution, backed by a complete line of new and retread truck tire offerings.”
Bandag and Bridgestone Americas have a decades-long business relationship. TDS stores have been authorized dealers of Bridgestone Americas’ tires, and many GCR Tire Centers, units of Bridgestone Americas’ subsidiary, BFS Retail & Commercial Operations, LLC, which service the commercial and off-the-road trucking industry, are Bandag dealers.
Retreads and new Bridgestone tires are complementary, servicing different customer needs. Retreading enables customers to get the full value of a new tire by reusing the tire’s casing again and again. As such, it is an integral part of a successful total tire management system.
According to Emkes, the combination of the two companies makes good business and economic sense. “Bandag’s history of success in the retread market and the similarities in the companies’ business models, distribution networks, customer base and respect for employees make this a perfect fit.”