Trelleborg, a company synonymous with specialist agricultural tyres as well as standard tractor rubber, has decided to remove itself from the tyre market altogether with the sale of its wheel systems division to Yokohama Rubber Company, for €2.1 billion.
The deal was not unexpected, as Yokohama had made an offer just before Christmas, although Trelleborg did not respond at the time.
Divestment brings focus
However the deal is now on and Trelleborg appears happy to leave the cut-throat tyre business behind and concentrate instead on its other interests.
The company started life in the town of Trelleborg, Sweden, in 1905, supplying bicycle tyres and other rubber goods to industry.
It has since grown to employ over 21,000 people throughout the world with an annual income of €3.3 billion.
The industrial side of the business now dominates the company and with €2.1 billion becoming available once the sale is complete, CEO, Peter Nilsson, suggests that the company intends to "grow Trelleborg into the world’s foremost engineered polymer solutions company in our selected industries, such as healthcare and medical, automation and aerospace, as well as in specialty industrial applications".
Greening the company image
The CEO goes on to add that the "transaction also reduces our cyclicality and our sustainability profile improves significantly with a lower CO2 footprint".
While it is understandable for companies to seek to even out their cash flow, selling huge parts of their business to bolster their green credentials suggests that attracting further, environmentally-friendly investment is also an important aspect of the move.
Trelleborg was already taking step towards this by setting a target of increasing the natural rubber content of its tyres by 10% over the next five years.
Whither the Trelleborg name?
What was not stated in the announcement of the sale was the fate of the Trelleborg brand, which is highly respected within agriculture.
Yokohama made no mention of this aspect either. The Japanese company noted that it expected the demand for car tyres to decline while agriculture and infrastructure projects would increase, thus explaining its interest in Trelleborg.
It was also pointed out that half of the OEM customers supplied by Trelleborg would be new to Yokohama, expanding its customer base by a significant amount.
The sale is expected to clear regulatory hurdles and be completed towards the end of 2022.
