Goodyear, Sumitomo Announce Deal
February 3, 1999
Goodyear, in a deal the Wall Street Journal says will make it No. 1 among world tire makers, announced a broad alliance with Japan’s Sumitomo Rubber Industries.
The complex deal effectively gives Goodyear control of Sumitomo’s U.S. and European operations, as well as a 10% stake in Sumitomo itself, which distributes the Dunlop brand. Goodyear and Sumitomo are putting many of their plants and marketing operations into joint ventures, with Goodyear owning the larger share of most of them.
The move shakes up the world tire business, which has been dominated for nearly a decade by Michelin and Bridgestone. According to Tire Business Magazine, Goodyear has a 17.1% market share, while Sumitomo has a 5.5% share. Goodyear will control about 22% of the global tire market, with a stronger No. 1 position in North American and a No. 2 position in the European market, according to the Wall Street Journal.
Joint ventures in North America and Europe will be owned 75% by Goodyear and 25% by Sumitomo. In Japan, SRI will own 75% of two joint ventures and Goodyear will own 25%. Voting rights will be shared 70/30.
The agreement is subject to approval by each company’s board of directors. The joint ventures are expected to be operational by Sept. 1.