KKR LLC (NYSE: KKR) will acquire the 75% controlling interest in Alliance Tire Group Ltd. from Warburg Pincus LLC. According to "Reuters", KKR will pay $500 million for Alliance Tire, generating a profit of hundreds of millions of dollars for Warburg Pincus.
Warburg Pincus's Indian partner in Alliance Tire, Yogesh Mahansaria, will keep a stake in the company and will work with KKR. KKR may ultimately own 90% of Alliance Tire, and will partly finance the acquisition with debt, which will be backed by collateral. The closing will be in July, subject to various conditions.
Alliance Tire has bonds listed on the Tel Aviv Stock Exchange (TASE). The bond debt totals NIS 135 million.
Warburg Pincus acquired control of Alliance Tire from Eliezer Fishman's Fishman Holdings at a company value of $50 million in 2007. The investment bank later invested tens of millions of dollars in the company, including to delist it from the TASE.
Alliance Tire has over 2,500 employees at its manufacturing plants in Israel and India, and R&D facilities in Israel, India, the US, and South Africa. The company sells its off-highway tires for the agricultural, forestry and construction industries under the Alliance, Galaxy, and Primex brands in 120 countries. Revenue totaled $421 million in 2012, 5% more than in 2011, and its profit rose 38% to $22 million, thanks to lower taxes and financing costs.