Information on the Target

Kordárna Plus, a.s., founded in 1948, has established itself as a leading manufacturer in Europe, specializing in cord fabrics designed for the rubber industry and industrial fabrics for conveyor belts. The company generates approximately 75% of its sales from tire cord fabrics (TCF) and has cultivated strong relationships with major global tire manufacturers. Its operations encompass two production facilities in Velká nad Veličkou, Czech Republic, and Senica, Slovakia, with a collective annual production capacity of up to 50,000 tons and a workforce of 786 employees.

Kordárna's strategic positioning in the heart of the European tire industry hub, which produces around 3.7 million cars within a 500km radius, significantly enhances its value proposition. This optimal location not only supports supply chain efficiency but also allows Indorama Ventures to meet the increasing demand for tire cord fabrics from its customers across more than 15 countries worldwide.

Industry Overview in the Target’s Specific Country

The automotive industry in Europe represents a crucial economic sector, driven by innovations that focus on lighter vehicles, enhanced fuel efficiency, and improved safety features. This industry is characterized by a robust supply chain that includes tire manufacturers and various component suppliers, fostering a competitive environment that encourages extensive collaboration between different stakeholders.

The growth trajectory of the automotive sector has been further accelerated by trends such as the electrification of vehicles and the shift towards environmentally friendly technologies. As a result, the demand for high-performance materials, like those produced by Kordárna, is expected to surge, providing ample opportunities for established players in the market.

Moreover, European manufacturers are increasingly focusing on sustainability and circular economy principles, which align with the offerings of firms like Indorama Ventures, known for integrating renewable resources into their production processes.

With the advent of smart technologies and automation within the automotive supply chain, companies are also leveraging advanced analytics and digital tools to optimize production efficiency and enhance customer engagement. This transformation is poised to drive growth through innovative solutions tailored to meet evolving consumer and regulatory demands.

The Rationale Behind the Deal

The acquisition of Kordárna by Indorama Ventures Limited signifies a strategic move to consolidate its foothold in the European tire cord market. By integrating Kordárna's expertise and established customer relationships with its own operations, Indorama aims to create synergies that bolster its capabilities in high value-added (HVA) sectors and enhance production flexibility across its portfolio.

Furthermore, this acquisition aligns with Indorama's growth strategy focused on securing a competitive advantage in the automotive industry, which is anticipated to contribute significantly to its revenue growth and market positioning. With Kordárna's established brand and production capabilities, Indorama will solidify its status as the leading tire cord producer in Europe and the second largest globally.

Information About the Investor

Indorama Ventures Public Company Limited, headquartered in Bangkok, Thailand, is recognized as a global leader in the petrochemical industry, with an expansive manufacturing footprint across multiple continents including Africa, Asia, Europe, and North America. The company specializes in producing both Necessities and High Value-Added (HVA) categories of Polymers, Fibers, and Packaging, with a consolidated revenue of approximately $8.4 billion in 2017 and a significant employee base of around 15,000.

Indorama Ventures has a strong commitment to sustainability, as evidenced by its inclusion in the Dow Jones Sustainability Index (DJSI). The firm actively seeks growth through strategic acquisitions and investments that enhance its existing capabilities, making this acquisition of Kordárna a noteworthy addition to its diverse portfolio, particularly in the automotive sector.

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The acquisition of Kordárna by Indorama Ventures represents a well-calculated strategic move that is likely to yield significant benefits for both parties involved. Indorama Ventures’ established presence in the petrochemical space coupled with Kordárna’s reputation as a trusted manufacturer in the tire cord domain will provide new growth avenues. The expected synergies from backward integration and vertical expansion position Indorama favorably within the competitive automotive landscape.

From an investment perspective, this deal is poised to bolster Indorama’s market share in Europe, potentially driving substantial revenue growth in the coming years. The automotive sector's ongoing transformation toward sustainability aligns with Indorama's operational vision and Kordárna’s production capabilities, suggesting a robust future for this combined entity.

While the integration phase will require careful execution to ensure the retention of Kordárna’s established customer relationships, the combined strengths of both companies should lead to improved operational efficiencies and innovative product offerings. Given these insights, this acquisition is seen as a strong investment with a high potential for future growth and value creation.

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