The Goodyear Tire & Rubber Co. has officially dissolved its global alliance with Sumitomo Rubber Industries.
“This successful resolution enhances our flexibility to grow profitably as we focus on delivering strong performance and sustainable economic value,” said Richard Kramer, Goodyear chairman, CEO and president. “Despite current challenges in the global economy, the long-term growth prospects for the tire industry remain strong. This agreement paves the way for us to pursue our growth strategy and strengthen our presence in key global markets particularly where our technology leadership and the Goodyear brand provide us competitive advantage.”
The alliance was formed in 1999 and primarily consisted of four joint venture operating companies in North America, Europe and two in Japan.
Goodyear announced it was seeking dissolution from the global alliance in February 2014 after claiming SRI had engaged in “anticompetitive conduct in violation of applicable antitrust law.” There have still been no statements on what SRI was accused of doing, or how SRI was impeding Goodyear’s interests.
The terms and conditions of the transaction remain the same as the agreement Goodyear announced on June 4, 2015:
– Goodyear will pay SRI $271 million and repay a pre-existing debt of approximately $55 million to SRI within three years, and sell the 3.4 million shares of SRI common stock it currently owns.
– SRI will acquire Goodyear’s 75% interest in Goodyear Dunlop Tires North America Ltd., which primarily manufactures and sells Dunlop brand tires in North America, including full ownership of the joint venture’s tire plant in Tonawanda, N.Y. SRI already owns a 25% stake in that joint venture.
– Goodyear will retain exclusive rights to sell Dunlop brand consumer and medium truck tires on the replacement markets in the U.S., Canada and Mexico, as well as to non-Japanese vehicle manufacturers in those countries.
– SRI will also assume full ownership of the Dunlop motorcycle tire business in North America, and have rights to sell Dunlop-brand motorcycle tires to Japanese vehicle manufacturers in the U.S., Canada and Mexico.
– Goodyear will acquire SRI’s 25% interest in Goodyear Dunlop Tires Europe B.V. Goodyear already owns 75% of that joint venture. Goodyear will continue to have the “exclusive rights to sell Dunlop brand tires in both replacement and original equipment consumer, commercial, motorcycle and racing markets in European countries where the current joint venture exclusively serves the market.”
– SRI will obtain exclusive rights to sell Dunlop brand tires in certain countries that were previously non-exclusive under the global alliance, including Russia, Turkey and parts of Africa.
– Goodyear will acquire SRI’s 75% interest in Nippon Goodyear Ltd., which serves the replacement market in Japan with Goodyear brand tires. Goodyear already held a 25% stake in that joint venture.
Goodyear said transaction does not impact the company’s 2015 or 2016 financial targets or capital allocation plan. Funds will come from the approximately $600 million already designated for restructurings under the capital allocation plan and the impact of the transaction will be included in the company’s full-year outlook in February 2016.
