Armen Sargsyan’s S8 Capital Group acquired the Russian tire manufacturer Kordiant

Armen Sargsyan’s S8 Capital group is consolidating more and more tire assets. Following the Kaluga plant of the German Continental, S8 acquired the Russian manufacturer Cordiant with three enterprises in Omsk and Yaroslavl. As a result of the transaction, the group will enter the top 3 tire manufacturers in Russia in terms of capacity, after Tatneft, which this year acquired the largest plant from Nokian, and Nizhnekamskshina.

S8 Capital bought another tire asset – the company closed the deal to buy 100% of the shares of Cordiant JSC, Kommersant was told in the holding. The perimeter of the transaction included two production sites in Yaroslavl and Omsk, where three plants are located, as well as the Intyre R&D center and the equipment repair center. The amount of the transaction is not disclosed.

A week ago it became known that the S8 group acquired the Continental plant in Kaluga and the distribution company. As part of the deal, the Russian holding also received one of the brands of the German tire concern, Gislaved (see Kommersant dated May 23). Now the portfolio of S8 Capital also includes the brands Cordiant, Tunga and Tyrex.

Advance Capital analyst Pavel Terentyev notes that EBITDA of Cordiant JSC, based on its latest financial statements, could be 5.5-6 billion rubles. The valuation of the company in terms of EBITDA using average market multiples can thus amount to 16.5-24 billion rubles.

Prior to the transaction, Cordiant JSC belonged to top management. The majority shareholder was Galina Gurinova, wife of Vadim Gurinov, founder and chairman of the board of directors of the Service Telecom Group of Companies, representatives of the former shareholder told Kommersant. The representative of Vadim Gurinov noted that for both parties the deal is of a strategic nature: “The sale of Cordiant will allow us to concentrate on the development of the tower business and other investment projects.”

“With the acquisition of Kordiant JSC, in the very near future we will be able to offer the market a wide product line of passenger, light truck and truck tires: from economy to premium segment,” says Torsten Schubert, Managing Director of S8 Capital diversified holding. He also noted the prospects for “the synergy of technologies and know-how of Continental with the developments of the engineering and technical team of the R&D center “Intyre””.

In 2020, Cordiant accounted for 9.6% of the passenger car tire market, 11.1% of the light truck tire market, 17.4% of solid steel cord truck tires and 31.8% of combined truck tires, follows from the market assessment, which Kommersant got acquainted with. The industry interlocutor notes that the situation has changed since then – especially against the backdrop of the current crisis. He says that Cordiant could increase its shares, while stressing that at the same time competition intensified in the market with increased imports from China.

Automotive expert Vladimir Bespalov notes that the tire market in the Russian Federation is quite promising – both due to access to artificial rubber, and due to the potential capacity of the primary market and the large secondary segment. In addition, the analyst concludes, the assembly of cars will become more active in the CIS markets, so there are export prospects.

The capacity of the former Continental plant is 4 million tires per year with the prospect of expanding to 16 million units. The capacity of Cordiant factories is 9.7 million tires (passenger cars, light trucks, trucks). S8 Capital estimated the capacity of Cordiant at about 9 million tires. Together with the former site, the Continental S8 will eventually concentrate the capacity of almost 14 million tires per year. Tatneft, which bought the Nokian plant, has a capacity of 17.5 million tires per year, and the former asset of Tatneft, Nizhnekamskshina, has 15 million tires (cars, light trucks, trucks), says Kommersant’s interlocutor in the market. At the same time, he notes that the former Nokian site in Vsevolozhsk is now clearly not working at full capacity (the company does not comment on the load). S8 reported that the plant in Kaluga is expected to reach 80% capacity utilization from the current 50% in the near future.

Olga Nikitina, Dmitry Kozlov