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Quebec-based Camso, an off-the-road tire maker, is being acquired by Michelin in a deal worth US$1.45-billion.

Camso, a Quebec-based multinational, holds 11 per cent of the global off-the-road (OTR) tire market for farm and construction equipment, with 7,500 employees across 26 countries and 22 manufacturing plants.

The sale will allow Michelin to strengthen its presence in the OTR tire market, where the French company currently only has a small footprint.

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As a result of the acquisition, Michelin will headquarter it’s OTR tire operations in Magog, Que., where Camso is based.

“It means that we are, at Michelin, increasing a global presence in Canada with Camso, but with Camso being the leader of our off-the-road operation, which I think is major,” said Jean-Dominique Senard, chief executive of Michelin. “There is no better illustration in this confidence that we have in each other.”

Mr. Senard also said the company would be exploring the idea of expanding in Quebec once the transition period of the acquisition is over. He noted that the transition period is expected to be a very swift one, and said the companies will benefit from US$55-million in synergies by 2021

Michelin has its Canadian headquarters in Laval, Que., and has been producing tires in Nova Scotia since 1971.

Michelin said in a news release that the acquisition would improve purchasing conditions for raw materials, optimize research and development capabilities and would add cash flow. The multinational company has a market capitalization of €18.6-billion ($28.6-billion) and produces 187 million tires annually across 68 production facilities in 17 countries.

Nearly three-quarters of Camso’s $1.3-billion in net annual sales come from construction and forklift tires, with the rest coming from agriculture, snowmobile and ATV tires and tracks. The company is the leading seller in agriculture, snowmobile and solid forklift tires and tracks segments.

While Michelin also operates in the off-the-road tire market – namely with off-road truck tires – Camso executive chairman Pierre Marcouiller said the acquisition of Camso made sense because the two companies, surprisingly, have no overlap in sales.

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“I have never seen such a deal where the execution risk is so low … ,” Mr. Marcouiller said. “It’s an extraordinary opportunity to get closer and stronger.”

He also said that Michelin’s technology and R&D budget will help support Camso’s culture of focusing on research as a way to promote development.

Camso has posted 7-per-cent compound annual growth rate since 2012, Mr. Marcouiller said, while the overall OTR market has grown by 3 per cent.

Michelin estimates the OTR tire market to be a $13-billion dollar industry, and say their acquisition of Camso represents a $2-billion step into the OTR market.

The Camso buyout comes on the heels of Michelin’s acquisition of Britain-based engineering company Fenner PLC, a move that will help Michelin’s presence in the mining market.

Fenner is world leader in reinforced polymer technologies, helping Michelin to further it’s expertise in high-tech materials. Michelin acquired Fenner for approximately $2.2-billion.

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Michelin’s stock rose by 2.06 per cent on Thursday to €104.1 ($160) in trading in France, although shares of the company have fallen by about 19 per cent this year.

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