Michelin CEO Jean-Dominique Senard has been made chairman of the board of directors at Renault. Senard will continue in his role at the helm of the French tire maker until his term expires on May 17, 2019.
The group’s leadership transition announced in February 2018 has been underway since May 2018. With the handover just a few weeks away, managing partner and future CEO, Florent Menegaux, has already taken on an increasingly significant role in steering the company in cooperation with Senard.
Special procedures have been put in place at Michelin to ensure that the transition proceeds in line with ethical standards.
In addition, Senard has asked that the compensation policy applicable to him at Michelin during this time should take into account the fact that he will be holding two positions simultaneously, thus calling for a reduction in his compensation.
In other news, Michelin has announced is to acquire 80% of PT Multistrada Arah Sarana TBK, a tire manufacturer based in Indonesia. The French tire maker aims to strengthen its presence in this highly promising market, which is dominated by local production.
With a production capacity of more than 180,000 tons annually (that is, 11 million passenger car tires, nine million two-wheel tires and 250,000 truck tires), Multistrada generated net sales of US$281m in 2017.
Leveraging its technical expertise with limited new investment, Michelin will gradually convert production from tier 3 passenger car tires to tier 2 Michelin Group brands, thereby enabling more tier 1 production at other Asian plants and supporting the growth in demand of tier 2 volumes in Europe, North America and Asia.
In addition, through the transaction Michelin will acquire a 20% stake in the retailer PT Penta Artha Impressi, in partnership with Indomobil and private investors, which will boost the marketing and sales of Michelin tires in Indonesia.
Senard said, “The acquisition of Multistrada represents an excellent opportunity for Michelin to expand its operations in Indonesia, the most populous country in Southeast Asia, and immediately gain competitive, good-quality production capacity without having to create any new manufacturing facilities.”
Multistrada CEO Pieter Tanuri commented, “We are very proud of what we achieved with Multistrada and we are confident Michelin is the ideal partner to take Multistrada forward into a new era of growth and success for the benefit of all stakeholders and employees.”
Potential synergies in manufacturing, sales and purchasing are expected to represent up to US$70m per year within three years of the acquisition. Multistrada, including the 20% stake in PT Penta and its 50ha of land, has been valued at US$700m enterprise value, representing 6.3 times EBITDA for the 12 months ending in September 30, 2018, after expected synergies.
Michelin will pay US$439m for 80% of Multistrada’s shares, subject to certain closing adjustments. As Multistrada is a publicly listed company, and pursuant to Indonesian regulations, Michelin will subsequently launch a public offer for the remaining outstanding shares, at the same price per share as that offered to the 80% shareholder group.
The acquisition will be funded from internal financial resources and is not expected to have an impact on Michelin’s ratings.