Tire maker Kenda Rubber Industrial Co (建大輪胎) said it is to fully acquire Denmark-headquartered STARCO Europe A/S for no more than 18 million euros (US$21.2 million) to pursue vertical integration.
The acquisition, which is scheduled to be completed on Monday, also aims to expand the company’s presence in Europe, according to a company filing with the Taiwan Stock Exchange.
Revenue generated from European customers only makes up 8 percent of the company’s total sales, while sales in the US contribute nearly 24 percent, data showed.
“The transaction is Kenda’s first acquisition in the European market and we aim to duplicate our success [of developing a US business] there,” a company official said by telephone yesterday.
The official, who asked to remain anonymous, said the two parties have been working together on the research and development of wheels for industrial machines for years.
It also marks the Taiwanese firm’s second big step in Europe after it set up a technical center last year, he added.
Apart from bringing technology, STARCO can also broaden Kenda Rubber’s customer base, as the Danish firm has manufactured wheels for a wide range of customers for more than 55 years.
STARCO — which posted a turnover of 110 million euros last year — has six sales and distribution centers across Europe, according to the company’s Web site.
Meanwhile, Kenda Rubber said a new plant for producing radial tires in Vietnam is to begin trial runs next month, as part of its effort to explore the business potential of Southeast Asia.
In the near term, the tire plant would be capable of manufacturing 10,000 tires for passenger cars per day, the official said.
Kenda posted a net profit of NT$209.37 million (US$6.89 million) in the first half of this year, down 86.09 percent from NT$1.5 billion a year earlier, which the company blamed on rising material costs and foreign-exchange losses of NT$113 million.
That represented earnings per share of NT$0.24, down from NT$1.72 in the same period last year, data showed.
Revenue in the first six months of the year slid 0.21 percent year-on-year to NT$15.11 billion from NT$15.14 billion.
Gross margin fell to 20 percent from 28.17 percent.
Kenda shares slid 0.23 percent to close at NT$42.80 in Taipei trading yesterday.
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