Tire giants roll into town
The two sales netted a total $165 million for the state treasury, with additional medium-term investment pledges exceeding a combined $200 million.
Stock analysts consider both publicly traded companies good buys. Debica and Stomil-Olsztyn together reported slightly more than zl. 69 million ($28 million) in 1994 earnings, with both companies showing more than 80% growth in this year's third quarter results.
"Debica is the crown jewel," said Stan Gault, chairman of Goodyear. Goodyear had initially considered buying both tire companies but agreed last Saturday to pay $55 million for 32.7%, or zl. 40 ($16) a share, for Debica, with plans to increase that stake to at least 50% by year's end through a new share issue.
"We feel (Stomil) has obsolete technology," Gault said. Goodyear promised to spend $60 million next year to modernize Debica's production line.
"We view this opportunity to join two very strong companies. Time will show that this will be a good deal," Gault said. The acquisition is part of the company's strategic expansion into developing markets, and the investment in Poland is Goodyear's outpost in Eastern Europe, he said.
Debica reported earnings of zl. 21.5 million (about $9 million) on zl. 325.8 million ($141 million) total sales in 1994 with projected sales of zl. 500 million ($200 million) this year. The company will continue to produce its line of tires for passenger cars, light trucks and farm vehicles. After modernization, Goodyear plans on increasing production volumes and introducing a new line of steel-belted truck tires which are not yet produced in Poland.
Gault said that the company wants to increase its stake in Debica to more than 50% before it transfers production technology to the plant. It should happen in the next few months, he said.
While Goodyear picked up about half the state's holdings in Debica, Michelin bought out the state in the Stomil-Olsztyn sale to set up a platform in Eastern Europe.
The French tire maker paid zl. 280 million ($110 million) for a 52.1% stake in Stomil-Olsztyn, purchasing more than 14 million shares at a rate of zl. 19.75 ($8) per share. Stomil-Olsztyn reported net sales of zl. 47.8 million ($19.5 million) in 1994.
"We paid a fair price. I am happy to have the company on the exchange," said Francois Michelin, chairman of Michelin. The company plans to invest $150 million over the next four years in modernization. Michelin pledged to keep all 3,800 Stomil workers on the job for two years with annual pay raises of 5% over inflation.
"We want to be Polish in Poland," Michelin said.
He added that the company will produce the whole line of Michelin tires at the plant but has no plans to stop producing Stomil products. "We want to give (our clients) the best quality at the lowest price," he said.
In 1994, Stomil had a 38% market share in Poland for sales of passenger car tires. Officials would not disclose target production volumes.
The Warsaw Stock Exchange suspended trading in shares in the two tire makers on Nov. 28 after speculation had pushed shares to annual highs of zl. 41.20 ($17) for Debica and zl. 24.80 ($10) for Stomil-Olsztyn. On Nov. 24, P/E was 13.6 for Stomil-Olsztyn and 18.92 for Debica.
The companies returned to trading on the bourse on Dec. 5. In a surprise to analysts, Stomil-Olsztyn's shares remained flat and Debica fell 5% in heavy trading. Analysts have concluded that investors were not initially phased by the strategic investors.
Stock analysts consider both publicly traded companies good buys. Debica and Stomil-Olsztyn together reported slightly more than zl. 69 million ($28 million) in 1994 earnings, with both companies showing more than 80% growth in this year's third quarter results.
"Debica is the crown jewel," said Stan Gault, chairman of Goodyear. Goodyear had initially considered buying both tire companies but agreed last Saturday to pay $55 million for 32.7%, or zl. 40 ($16) a share, for Debica, with plans to increase that stake to at least 50% by year's end through a new share issue.
"We feel (Stomil) has obsolete technology," Gault said. Goodyear promised to spend $60 million next year to modernize Debica's production line.
"We view this opportunity to join two very strong companies. Time will show that this will be a good deal," Gault said. The acquisition is part of the company's strategic expansion into developing markets, and the investment in Poland is Goodyear's outpost in Eastern Europe, he said.
Debica reported earnings of zl. 21.5 million (about $9 million) on zl. 325.8 million ($141 million) total sales in 1994 with projected sales of zl. 500 million ($200 million) this year. The company will continue to produce its line of tires for passenger cars, light trucks and farm vehicles. After modernization, Goodyear plans on increasing production volumes and introducing a new line of steel-belted truck tires which are not yet produced in Poland.
Gault said that the company wants to increase its stake in Debica to more than 50% before it transfers production technology to the plant. It should happen in the next few months, he said.
While Goodyear picked up about half the state's holdings in Debica, Michelin bought out the state in the Stomil-Olsztyn sale to set up a platform in Eastern Europe.
The French tire maker paid zl. 280 million ($110 million) for a 52.1% stake in Stomil-Olsztyn, purchasing more than 14 million shares at a rate of zl. 19.75 ($8) per share. Stomil-Olsztyn reported net sales of zl. 47.8 million ($19.5 million) in 1994.
"We paid a fair price. I am happy to have the company on the exchange," said Francois Michelin, chairman of Michelin. The company plans to invest $150 million over the next four years in modernization. Michelin pledged to keep all 3,800 Stomil workers on the job for two years with annual pay raises of 5% over inflation.
"We want to be Polish in Poland," Michelin said.
He added that the company will produce the whole line of Michelin tires at the plant but has no plans to stop producing Stomil products. "We want to give (our clients) the best quality at the lowest price," he said.
In 1994, Stomil had a 38% market share in Poland for sales of passenger car tires. Officials would not disclose target production volumes.
The Warsaw Stock Exchange suspended trading in shares in the two tire makers on Nov. 28 after speculation had pushed shares to annual highs of zl. 41.20 ($17) for Debica and zl. 24.80 ($10) for Stomil-Olsztyn. On Nov. 24, P/E was 13.6 for Stomil-Olsztyn and 18.92 for Debica.
The companies returned to trading on the bourse on Dec. 5. In a surprise to analysts, Stomil-Olsztyn's shares remained flat and Debica fell 5% in heavy trading. Analysts have concluded that investors were not initially phased by the strategic investors.
