Aeolus discloses inside story for terminating acquisition of PTG

Aeolus Tyre has announced to terminate the acquisition of Prometeon Tyre Group (former Pirelli Industrial).

The Chinese tire producer held a meeting to explain investors’ questions concerning the event.

Automatic termination of acquisition agreement

As to the main reasons for the termination, Aeolus said as of Dec. 31, 2017, the overseas investment transaction hadn’t been recorded by the Ministry of Commerce and National Development and Reform Commission, nor been approved, checked or recorded by relevant government authorities.

It means that the preconditions of the Asset Injection Agreement haven’t been satisfied.

While the concerning parties failed to reach agreement on putting off the deadline of the preconditions.

Therefore, the Asset Injection Agreement automatically terminated on Dec. 31, 2017 and Aeolus couldn’t continue its acquisition of PTG as expected.

In addition, because of high debt-liability ratio, Aeolus’s own capital couldn’t afford the acquisition of 90% stake in PTG and it wouldn’t consider injecting capital by cash.

Business integration continues

PTG is expected to help enhance and coordinate with Aeolus’s production, R&D and sales.

In spite of current market condition and the termination of the acquisition, China National Tire and Rubber Co., Ltd. will reconsider injecting relevant industrial tire businesses and assets in Aeolus when possible.

In addition, the two companies’ business integration has continued.

Clear development strategy in future

With respect to the development strategy in future, the executives of Aeolus have been pushing forward integration and management measures, including:

1.Leveraging technological innovation and R&D capacity to enhance product performance, upgrade product level, so as to increase profitability and prices;

2.Boosting marketing integration of markets and make use of the cooperativity of channels by using products of all levels as well as all brands;

3.Centralizing procurement management, in a bid to ensure stable raw material provision and economic procurement costs;

4.Reforming product structure of all plants of Aeolus, so as to improve capacity utilization of the brands and optimize regional deployment.

Aeolus also disclosed that new products integrating technologies of Pirelli and Aeolus have been produced and will be put into overseas market.

Primary shareholders of Aeolus promised to entrust Aeolus to take charge of the industrial tire businesses or assets, or to sell parts of industrial businesses or assets to a third party to avoid horizontal competition.

In addition, Aeolus will continue using Pirelli’s technologies to upgrade products and enhance its competitiveness and profitability.

Aeolus Tyre will resume trading on Jan. 8.