Hankook Tire has resumed its bid to acquire Multistrada Arah Sarana, the second largest tire maker in Indonesia.
According to the investment banking industry on Nov. 15, Hankook Tire is currently in the process of acquiring management control of Indonesian tire maker Multistrada Arah Sarana. In addition to Hankook Tire, a number of global tire companies including Michelin, a French tire maker, are reportedly participating in the race to take over the Indonesian company.
This is not the first time Hankook Tire showed interest in taking over Multistrada. In 2011, the company sought to take it over but failed due to differences on the acquisition price with the seller.
Hankook Tire's push to acquire the local tire company in Indonesia is attributed to low labor costs in the country. Indonesia has stronger wage competitiveness than Korea and even China. Indonesia is also attractive as it is geographically close to China, the core tire market. About 80% of the tires produced at local factories in Indonesia are exported, mostly to China. Indonesia is also the world's second-largest producer of natural rubber, which means that it is easy to secure raw material for tires in Indonesia.
Hankook Tire has already established a production base in Indonesia. It invested US$350 million in 2011 to establish a tire factory with an annual production capacity of six million tires. If Hankook Tire succeeds in acquiring Multistrada, synergies are expected as the company can secure a skilled local workforce.