Apollo to sell S. Africa plant to Sumitomo

DURBAN, South Africa—Apollo Tyres Ltd. is selling its Ladysmith, South Africa, passenger and light truck tire factory and the rights to the Dunlop brand in Africa to Sumitomo Rubber Industries Co. Ltd. for $60 million. Apollo Tyres said it will retain its Durban, South Africa, truck and off-the-road tire plant. The India-based company will continue to make and sell Apollo-, Vredestein- and Regal-brand tires in Africa through a sales and distribution network it will set up across the continent. Sumitomo will obtain Apollo’s sales networks throughout Africa and production and sales rights to the Dunlop brand in 30 countries in Africa and two bordering the Indian Ocean.

The Japanese firm already owns the rights in 20 African nations, and it said the deal “greatly increases the scale” of Sumitomo’s tire sales business in Africa and “accelerates the pace of our global expansion and development.” Apollo and Sumitomo didn’t disclose how much each company would retain under the agreement. The deal calls for the companies to undertake contract manufacturing of their respective brands at each other’s facility to have locally manufactured products available for the market, Apollo said. The companies said they plan to retain all employees at the two facilities. Sumitomo said it plans to expand capacity at the Ladysmith factory by about 35 percent by 2016 to 12,000 units a day. The Japanese tire manufacturer didn’t reveal how much it expects to spend on that project. Apollo in 2006 obtained the South African tire operations when it acquired Dunlop Tyres International (Pty.) Ltd. in a deal valued then at $62 million. Apollo Tyres South Africa reported sales of $275 million in its most recent fiscal year.