To become India's fourth biggest four-wheeler tyre company, JK Tyre has acquired the privately-held Mexican tyre company Tornel for Rs 270 crore.

After adding up Tornel in its personal list, JK Tyres’ turnover will now surpass $1 billion.

The buyout is likely to close by May 2008, subject to regulatory approvals. The acquisition will be funded through a mix of internal accruals and debt.

Tornel specializes in passenger car radials, and has three tyre plants with a combined annual capacity of 6.6 million tyres. With this acquisition, JK’s yearly capacity of 8.7 million tyres would increase to around 15.3 million units.

Mr. RP Singhania, Vice-Chairman and Managing Director, JK Tyre said, “The acquisition would be for 100 per cent shareholding in the company and is made through a special purpose vehicle. The buy out is expected to close by the end of May 2008.”

Mr, Singhania also said that the acquisition was part of the company’s plan to gain access to North American markets through a variety of free trade agreements (FTAs) that Mexico has with these countries.

The company has decided to carry on the Tornel brand in Mexico, Brazil and other American markets that will co-exist with its own JK Tyres. It will also make the most of Tornel’s 241 distributors as well as 282 sales outlets to distribute its personal brand.

JK Tyres will invest Rs 480 crore in its domestic operations.

Besides, it is also raising its off-the-road (OTR) tyre capacity with an investment of Rs 120 crore and increasing its truck radial tyre capacity to 8 lakh tyres from the existing 3.67 lakh tyres by investing Rs 315 crore.

JK Tyres stock fell 0.26% to close at Rs 16.35 on the Bombay Stock Exchange on Friday.