Trelleborg has signed an agreement to acquire CGS Holding a.s. – a privately-owned company with leading positions in agricultural and specialty tires as well as engineered polymer solutions. The total cash consideration amounts to approximately SEK 10.9 billion ($1.25 billion) on a cash and debt-free basis. CGS is headquartered in the Czech Republic and generated sales of approximately SEK 5,525 billion ($635.18 billion) in the rolling 12-month period ended June 30, 2015, with a corresponding EBIT-margin of 16 percent.

Closing of the transaction is subject to approvals from relevant competition authorities and is expected to be completed in the first half of 2016.

“I am very proud to announce this highly complementary acquisition, which is a significant and attractive add-on to our existing businesses. CGS, with its strong and well-performing operations in agricultural and industrial tires as well as engineered polymer solutions, will strengthen and complement Trelleborg’s already leading positions in a number of existing areas,” said Peter Nilsson, president and CEO of Trelleborg.

“Trelleborg is a trustworthy strategic partner possessing a comprehensive vision for the development of CGS HOLDING and we are confident that Mitas, Rubena and Savatech rubber manufacturing business will be placed in capable hands,” said CGS spokeswoman Vera Bechynova.

With the acquisition of CGS and its subsidiary Mitas, Trelleborg is establishing itself as a global leader in agricultural tires and reinforces its leading position in industrial tires. As a result of the acquisition, Trelleborg Wheel Systems will almost double its revenues, broaden its geographical reach and add new positions in complementary tire niches. Mitas is performing strongly despite the current downturn in the agricultural market. Moreover, the acquisition of CGS’s other industrial polymer businesses will enhance Trelleborg’s leading positions in several of the group’s existing business areas.

“CGS has a highly complementary manufacturing footprint with competitive production in Central and Eastern Europe, USA and Mexico. The transaction adds to our capabilities, represents a strong strategic fit and is expected to generate synergies. The plan is to gradually integrate the acquired entities into Trelleborg’s existing five business areas. We regard the purchase price as attractive given the significant synergy potential and expected turnaround for the agricultural market,” said Nilsson.