Bridgestone buying Muscatine-based Bandag
George C. Ford, The Gazette, Cedar Rapids, Iowa
Dec. 6--Muscatine-based Bandag Corp. has agreed to be purchased by the largest tire company in the world.
Bridgestone Americas Holding Inc. said Tuesday it is buying Bandag, a manufacturer of retread tires, for $1.05 billion in cash. Bridgestone Americas, a subsidiary of Japan-based Bridgestone Corp., will pay $50.75 per share for Bandag, which represents a 13 percent premium over the company's closing stock price Monday.
Shares of Bandag rose $5.46, or 12.12 percent, to close Tuesday at $50.50 on the New York Stock Exchange.
Bandag said its board of directors approved the sale, which is subject to regulatory and shareholder approval. The deal is expected to close in the April-June quarter of 2007.
Bandag operates a global network of more than 900 franchised dealers that sell retread tires and provide tire management services. The company will become a wholly owned subsidiary of Bridgestone Americas after the sale is concluded.
Mark Emkes, chairman and chief executive officer of Bridgestone Americas, said Bandag's position as a leader in the retread industry and its reputation for quality service and technology were major considerations for the deal.
"The joining of Bridgestone Americas and Bandag will allow the two companies to better serve their customers by offering a comprehensive tire maintenance solution, backed by a complete line of new and retread truck tire offerings," Emkes said.
Martin Carver, chairman and CEO of Bandag, said Bridgestone and Bandag have had a long relationship, with Bridgestone tires being sold at Bandag locations.
Bandag was founded in 1957 by Martin Carver's father, Roy J. Carver, an engineer and pump manufacturer who bought the North American rights to a system of retreading tires from a German businessman. Within a few years, Roy J. Carver established a worldwide network of dealer franchises.
In 1963, Carver developed a method of rubber curing, which eliminated heavy, expensive metal curing bands.
Retread tires use the tire casing, which is wrapped with new tread that uses 7 gallons of oil, compared with 22 gallons required for newly manufactured tires.
That reduces the overall cost below that of a new tire, according to Bandag.
Bandag, with sales of $921 million in 2005, went public in 1968 and was listed on the New York Stock Exchange in 1972. The company opened its world headquarters in Muscatine the following year.
The Roy J. Carver trust operates the largest private philanthropic foundation in the state with assets of more than $300 million.
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December 8, 2006