Titan International, Inc. (TWI) has completed the acquisition of Carlstar Group LLC for approximately $296 million. This transaction, which closed on February 29, 2024, is a significant development in the specialty tyre manufacturing industry, combining two major players into the largest pure play specialty tyre manufacturer.
Q: How was the acquisition price for Carlstar Group LLC determined?
The purchase price of approximately $296 million was based on a multiple of about 4 times Carlstar’s 2023 pre-tax profits (adjusted EBITDA) of $73 million. Carlstar reported revenues of around $615 million in the same year.
Q: What does Carlstar Group bring to Titan International?
Carlstar Group adds substantial new customer relationships across various channels, including wholesale distributors, national retailers, and OEMs. It significantly diversifies Titan’s product portfolio, especially in areas where Titan previously had no presence, such as outdoor power equipment, power sports, and high-speed trailers. Carlstar’s four manufacturing facilities and 12 distribution centers further expand Titan’s manufacturing and distribution footprint.
Q: Can you elaborate on the financial aspects of the deal?
The acquisition was financed through a combination of cash and stock - $127 million in cash and $169 million in Titan’s equity, amounting to approximately 11.9 million shares. Additionally, Titan secured a new $225 million credit facility with Bank of America to fund the cash portion of the transaction.
Q: Who previously owned Carlstar Group, and what are their thoughts on the acquisition?
Carlstar was majority-owned by investment funds affiliated with American Industrial Partners Capital Fund V. Kim Marvin of AIP, now joining Titan’s Board of Directors, expressed that Titan is an ideal fit for Carlstar, appreciating the significant positive momentum Carlstar has built and looking forward to supporting its continued success as part of the Titan family.
Q: What are the expected benefits of this acquisition for Titan International?
The acquisition is transformative for Titan, enhancing its manufacturing capabilities, product portfolio, and customer base. It establishes Titan as a one-stop shop in the specialty wheel and tyre space, with expectations of achieving commercial and operational synergies. The integration of Carlstar’s products, particularly in consumer markets like outdoor power equipment and power sports, complements Titan’s offerings and is expected to drive future growth.
Q: What are the future plans for the newly combined entity?
Titan’s leadership is focused on leveraging Carlstar’s strengths to enhance its product offerings and customer relationships further. They anticipate sizeable commercial and operational synergies from the merger and plan to share more specific information about their expectations and strategies for the expanded Titan in the coming months. This acquisition positions Titan to offer a best-in-class product portfolio across a broader market range.
