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The American subsidiary of Japan's Bridgestone (the largest tire maker in the world) will acquire Bandag, the leading U.S. tire retreader, for $1.05 billion, or $50.75/share in cash -- a 12.8% premium on Monday's close of $45.04. The CEO of Bandag-BDG-1yr-chart-12-05-06Bridgestone America said the merger would allow for better servicing of customers "by offering a comprehensive tire maintenance solution." A Bridgestone spokeswoman cited rising customer demand for retreads. Bridgestone will gain a global retreading network of 900-plus dealers spanning nearly 100 countries, with sales totaling $921 million last year. Bloomberg quoted Bridgestone's president in Tokyo, who said, "Higher fuel prices are prompting customers to cut costs [by using retreads]. It takes time and costs to develop this size of business. We were able to get that all at once." The merger is expected to close by early Q2 next year, pending approval by shareholders and regulators. Bridgestone's Tokyo-listed shares gained 3.5% today.
• Sources: Press release [pdf], Bloomberg
• Potentially impacted stocks and ETFs: Bandag (BDG), Bridgestone (Tokyo: 5108). Competitors: Goodyear Tire & Rubber (GT), Michelin (trades on Euronext: ML)

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Source: Bridgestone and Bandag to Merge, Shares Burn Rubber