Financial Times

Richard Peiris, AMW to work together, mulls synergies
By Duruthu Edirimuni
Following the surprise acquisition of 21 percent in Associated Motorways (AMW) by Richard Peiris Group, the leading tyre manufacturer will work together with the family owned firm in the future, according to AMW sources.
“These are still early days and we have not had any formal discussions with them about how we plan to work, but it will be a cohesive working arrangement with Richard Peiris,” an AMW official told The Sunday Times FT, adding that the entire transaction of Richard Peiris Group buying the stake came as a surprise.

Pravir Samarasinghe, Chief Operating Officer, Richard Peiris Group insisted that this was not a hostile acquisition and that Richard Peiris is a passive shareholder of AMW. “The shares were available in the market and we felt this investment will appreciate in value. This acquisition was not predatory and Richard Peiris is only a passive shareholder in the company,” he said.

He said there is a lot of synergy between AMW and Richard Peiris’ tyre businesses and this could be further developed, but said it is too early to lay definite plans.

However, stock brokers said that Richard Peiris, despite being the pioneer and the market leader in tyre rebuilding in the country, wants to cut down on the competition from AMW, while consolidating their tyre manufacturing business.
When asked whether AMW will make an offer for the 21 percent stake to Richard Peiris, the AMW official said it is an option. “Richard Peiris does not have a majority share of the company and the decisions of the firm will depend entirely on the De Zoysa brothers, who owns the controlling stake in the company,” he added.

Richard Peiris, the once wartime tyre manufacturer now established as a blue chip company, bought a 21 percent stake in AMW from Shankar Somasundaram, owner of S.S. Motors at Rs.430 million.

Stock brokers said that Somasundaram, who was holding the 21 percent for more than three years, was looking to buy the controlling share from the De Zoysa family for some time, but they were unwilling to sell it to him.
Richard Peiris, who had nearly Rs.1 billion excess cash after selling Dipped Products, bought the stake from Somasundaram.

Started as a tyre rebuilding company over 50 years ago, AMW diversified into other areas of manufacturing and industrial services such as three wheeler and two wheeler tyre production and being the sole agent for ten international vehicle brands.

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