Goodyear Tire & Rubber Co. and Sumitomo Rubber Industries (SRI) are dissolving their global alliance and in the process Sumitomo will acquire the remaining 75% of Dunlop Tires North America that it does not own.
The companies have had a formal alliance since 1999. The agreement includes four joint ventures, one each in North America and Europe, and two in Japan.
Under the terms of the agreement, Goodyear will pay SRI $271 million upon closing of the transaction, which is expected in the fourth quarter of 2015.
“While we have derived value from the alliance over the last 16 years, Goodyear is well positioned today to pursue our strategy on our own,” said Goodyear Chairman and Chief Executive Officer Richard J. Kramer. “This successful resolution increases our flexibility to grow profitably as we continue to focus on delivering strong performance and sustainable economic value.”
The agreement, when closed, would resolve the pending arbitration filed in January 2014. The agreement enables both companies to avoid the cost and uncertainty of the arbitration process.
In North America, SRI currently owns 25% of the Dunlop brand. Under terms of the agreement, Goodyear will retain exclusive rights to sell Dunlop-brand tires in both the consumer and commercial replacement markets of the United States, Canada and Mexico as well as to non-Japanese vehicle manufacturers in those countries.
In addition to assuming full ownership of the Dunlop motorcycle tire business in North America, SRI will have rights to sell Dunlop-brand tires to Japanese vehicle manufacturers in the United States, Canada and Mexico.
In Europe, the changes include:
- Goodyear (currently 75% interest) will acquire SRI’s 25% interest in Goodyear Dunlop Tires Europe B.V. (GDTE).
- Goodyear will retain 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 certain countries in Africa.
- Goodyear (currently 25% interest) will acquire SRI’s 75% interest in Nippon Goodyear Ltd., which serves the replacement market in Japan with Goodyear-brand tires.
- SRI (currently 75% interest) will acquire Goodyear’s 25% interest in Dunlop Goodyear Tires Ltd., which serves the original equipment market in Japan with Goodyear- and Dunlop-brand tires.
- Goodyear will regain exclusive rights to serve the Japanese replacement and original equipment markets with Goodyear-brand tires.
- SRI will continue to have exclusive rights to sell Dunlop-brand tires in the Japanese replacement and original equipment markets.