Bridgestone Americas Holding Inc. announced on Tuesday that it would acquire Bandag Inc. (BDGA: NYSE) for approximately $1.05 billion.
The Nashville, Tenn.-based tire and rubber company will pay $50.75 per share in cash for Bandagâ€™s shares. In a statement, Bridgestone said that Bandagâ€™s tire retreading business would complement its existing products and allow the company to serve different customers. Retreading is a process which enables customers to get a new tire by reusing the casing from an old one.
â€œBandagâ€™s history of success in the retread market and the similarities in the companiesâ€™ business models, distribution networks, customer base and respect for employees make this a perfect fit,â€ said Mark A. Emkes, Chairman and CEO of Bridgestone Americas Holding, Inc.
Transportation companies actively seek tire management programs that start with premium new tires and take them through the retread process. BridgeStone Americas Holding Inc., a subsidiary of Bridgestone Corp. says the acquisition will enable the company to provide a total tire offering through managing the customersâ€™ needs throughout the tire life cycle.
The deal is expected to be completed in the second quarter of 2007. Bandag Inc. with over 900 franchised dealers will become a subsidiary of the firm.
Bandagâ€™ shares rose $5.23 or 11.61 percent to $50.30 in Tuesday afternoon trading on the New York Stock Exchange.