Tyre maker all pumped up over US buy

Omni United chief executive G.S. Sareen expects the Singapore firm's acquisition of California-based Interstate Tire Distributor to "boost significantly" Omni's distribution networks in the US and more than double its retail reach. The US is Omni Uni
Omni United chief executive G.S. Sareen expects the Singapore firm's acquisition of California-based Interstate Tire Distributor to "boost significantly" Omni's distribution networks in the US and more than double its retail reach. The US is Omni United's biggest market, generating 65 per cent of its overall revenue.PHOTO: LIM YAOHUI FOR THE STRAITS TIMES

Singapore tyre manufacturer Omni United believes a key acquisition that it made in the United States will spur its strategy for global growth.

The firm bought California- based Interstate Tire Distributor for an undisclosed sum in October.

Omni chief executive G. S. Sareen told The Straits Times in a recent interview: "The US is our biggest market... (but) organic growth as a means to expand in a mature market is always difficult.

"Buying a wholesale company such as Interstate Tire Distributor was much more economically viable than buying a retail chain, for instance, and you get a far bigger reach. If I had to start something from scratch, I would have to put an army of salespeople there, given the geography of the US."

The US is Omni United's biggest market, generating 65 per cent of its overall revenue.

Mr Sareen expects the deal to "boost significantly" the firm's distribution networks in the US and more than double its retail reach.

BETTER STRATEGY

Buying a wholesale company such as Interstate Tire Distributor was much more economically viable than buying a retail chain, for instance, and you get a far bigger reach.

MR G.S. SAREEN, chief executive of Singapore tyre manufacturer Omni United, which bought California-based Interstate Tire Distributor in October

Interstate Tire Distributor services more than 2,500 retailers across the US west and focuses on distributing mid-tier brands Toyo, Nexen and Yokohama, and value-driven brands Mastercraft, Duro and Goodride.

This will likely boost the firm's US$70 million (S$99 million) revenue this year to US$150 million in the next two to three years, said Mr Sareen. "We're just going to complement and add more to the existing products because retailers do need more products - because their customers need more products."

He said the company, which makes tyres under various brands, has the appetite for more deals. "We're certainly always looking for opportunities for acquisitions, because our business is pretty global. Wherever there is a decent population, that's a market."

Mr Sareen pointed to Europe, Asia and North America as three

areas of potential growth. The company is in discussions over two other similar transactions, he added.

While the global economy has been "sluggish", Mr Sareen is optimistic that the firm will continue to grow in the coming months. "The (tyre) market is still growing, especially as more people buy or change their old cars for new ones. We're in only 80 countries today. There are a lot of opportunities out there."

A version of this article appeared in the print edition of The Straits Times on December 19, 2015, with the headline 'Tyre maker all pumped up over US buy'. Print Edition | Subscribe