Tokyo/New York, Dec. 6 (Reuters): Bridgestone Corp, Japan’s biggest tyre maker, said it would pay $1.05 billion in cash for Bandag Inc, the largest US supplier of retread tyres, to offer a full range of services to truck fleets.

The deal gives Bridgestone, until now only a small player in retreaded tyres, a major presence in the global retread market as cost-conscious trucking firms increasingly turn to companies that can offer both retreads and new tyres.

“To have built up this business model on our own would have been extremely difficult in terms of time, cost and know-how,” chief executive Shoshi Arakawa told a news conference.

Shares of Bandag, which would become a subsidiary of Bridgestone Americas, jumped 12 per cent on Tuesday to $50.50, close to the purchase price of $50.75 per share. Bridgestone shares climbed 3.5 per cent to end at 2,550 yen on Wednesday.

Retread tyres are made by removing the used tyre tread and adding new rubber so that the tyres can be reused.

Rivals such as France’s Michelin, with whom Bridgestone competes for the title of world’s biggest tyre maker, and third-ranked Goodyear Tyre & Rubber Co offer both new tyres and retread services to truck fleets.

Muscatine, Iowa-based Bandag, whose 2005 sales totalled $921 million, leads the US retread market with a 45 per cent share and is second to Michelin in Europe with a 16 per cent market share.

The global retread tyre market for trucks and buses is estimated at about 58 million tyres, just under half the size of the market for new tyres. Retread tyres cost about half as much as new tyres.