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Goodyear Announces SRI Joint Venture Breakup Terms

Goodyear Tire & Rubber Co. has formally announced the dissolution of its business partnership with Sumitomo Rubber Industries Ltd.

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Goodyear Tire & Rubber Co. has formally announced the dissolution of its business partnership with Sumitomo Rubber Industries Ltd.

And the dissolution agreement gives Goodyear the exclusive rights to continue marketing and selling Dunlop consumer and commercial truck tires across North America.

SRI will 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.

Under the terms of the dissolution agreement, Goodyear will pay SRI $271 million. Goodyear will also 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.

In North America, 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.

In Europe, 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.”

“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 Rich Kramer. “This successful resolution increases our flexibility to grow profitably as we continue to focus on delivering strong performance and sustainable economic value.

The “global alliance” between the two tiremakers was formed in 1999 and basically consisted of four “joint venture operating companies, one each in North America and Europe, and two in Japan,” Goodyear said.

Read more over on MPN’s sister publication, Tire Review.

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