Bridgestone To Pay $1.05 Billion For Bandag

Posted on December 6, 2006

Bridgestone Corp. announced it will pay $1.05 billion in cash for Bandag Inc., the largest U.S. supplier of retread tires. The move is expected to give Bridgestone, until now only a small player in retread tires, a major presence in the global retread market as cost-conscious trucking firms increasingly turn to companies that can offer both retreads and new tires.

“To have built up this business model on our own would have been extremely difficult in terms of time, cost and know-how," said Bridgestone CEO Shoshi Arakawa. Muscatine, Iowa-based Bandag, whose 2005 sales totaled $921 million, leads the U.S. retread market with a 45% share and is second to Michelin in Europe with a 16% market share. The global retread tire market for trucks and buses is estimated at about 58 million tires, just under half the size of the market for new tires. Retread tires cost about half as much as new tires.

Bandag will be operated as a subsidiary of Bridgestone Americas. Bridgestone officials said the company would not just be adding on a retread business but that it expected many synergies, including the promotion of Bridgestone tire sales through the Bandag dealer network. Bandag and Bridgestone expect the deal to close late in the first quarter or early in the second quarter.