Goodyear pays $271 million to cancel cooperation with Sumitomo Rubber Co., Ltd.

Goodyear Tire & Rubber Company officially announced on June 4, 2015 local time, that it has reached an agreement with Sumitomo Rubber Co., Ltd. to dissolve the coalition relationship established in 1999.

Goodyear pays $271 million to cancel cooperation with Sumitomo Rubber Co., Ltd.
Goodyear pays $271 million to cancel cooperation with Sumitomo Rubber Co., Ltd.

In January 2014, Goodyear, the world's third-largest tire manufacturer, began deliberating the dissolution of a 15-year business alliance with Sumitomo Rubber, the sixth-largest tire manufacturer.

Goodyear said that its fiscal targets for 2015 and 2016 will not be affected. Sumitomo Rubber revealed that whether it will affect its financial outlook is still under further investigation.

The announcement also revealed that Goodyear will pay Sumitomo Rubber 271 million U.S. dollars (about 1.68 billion yuan, 1 U.S. dollar = 6.2006 yuan) for the "breakup fee" and will also pay about 55 million U.S. dollars in debt to Sumitomo Rubber in the next three years. Currently, the two companies have joint ventures in North America, Europe and Japan. The brands include Dunlop and Goodyear. At the same time, they each hold cross-shares, but plans to give up when appropriate.

Specifically, Sumitomo Rubber will acquire 75% of Goodyear's North American joint venture, and Goodyear will acquire Sumitomo Rubber's 25% stake in the European joint venture. In addition, in Japan, the two sides have two joint ventures, and the two parties will each hold one.

As regards the Dunlop brand, both parties will split the right to use the brand according to the region. For example, in North America, Goodyear will hold or replace Dunlop brand tires for new cars made in Japan; Sumitomo Rubber will have Dunlop brand rights for all cars made in Japan, including motorcycles. In much of Europe, Goodyear holds the right to use the Dunlop brand. In Japan, Sumitomo Rubber retains the right to use the Dunlop brand, but the Goodyear brand is still owned by Goodyear.

Regarding anti-competition, Goodyear publicly stated in February 2014, “As the Sumitomo Rubber Company was confirmed to have participated in anti-competitive behavior, Goodyear had contacted the U.S. International Chamber of Commerce on January 10, 2014, hoping that the latter would Specially arbitrate relations with Sumitomo Rubber's dissolution alliance.” Sumitomo Rubber said that the company did not participate in any anti-competitive behavior.

However, at the time of the announcement, both Goodyear and Sumitomo Rubber declined to comment further on the matter. .

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