– Transaction accretive to adjusted net income beginning in 2016
– No impact to 2015, 2016 financial targets or capital allocation plan
The Goodyear Tyre & Rubber Company announced today that it has reached agreement with Sumitomo Rubber Industries, Ltd. (SRI) to dissolve the global alliance between the two companies.
Goodyear and SRI formed the global alliance in 1999. It primarily consists of four joint venture operating companies, one each in North America and Europe, and two in Japan.
“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.”
Kramer concluded, “We are committed to a smooth and orderly transition that will be seamless to our customers and consumers in North America, Europe and Japan.”
The agreement announced today, 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.
Overview of Agreement
North American Joint Venture
– SRI (currently 25 % interest) will acquire Goodyear’s 75 % interest in Goodyear Dunlop Tyres North America, Ltd. (GDTNA), which primarily manufactures and sells Dunlop-brand tyres in North America, including full ownership of the joint venture’s tyre plant in Tonawanda, N.Y.
– Goodyear will retain exclusive rights to sell Dunlop-brand tyres 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 tyre business in North America, SRI will have rights to sell Dunlop-brand tyres to Japanese vehicle manufacturers in the United States, Canada and Mexico.
European Joint Venture
– 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 tyres 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 tyres in certain countries that were previously non-exclusive under the global alliance, including Russia, Turkey and certain countries in Africa.
Japanese Joint Ventures
– Goodyear (currently 25 % interest) will acquire SRI’s 75 % interest in Nippon Goodyear Ltd., which serves the replacement market in Japan with Goodyear-brand tyres.
– 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 tyres.
– Goodyear will regain exclusive rights to serve the Japanese replacement and original equipment markets with Goodyear-brand tyres.
– SRI will continue to have exclusive rights to sell Dunlop-brand tyres in the Japanese replacement and original equipment markets.