Yokohama and Kumho sign technology exchange, capital alliance MOU

The Yokohama Rubber Co., Ltd. And Kumho Tire Co., Inc. signed a Memorandum of Understanding (MOU) on 29 November. The companies report that they have agreed to open discussions relating to technology exchanges and a capital alliance based on “cross-shareholdings”.

A statement announcing the news, explained that the two companies aim to increase their competitiveness and “enhance their future growth potential” in the global tyre market by sharing R&D resources and making more effective use of them through joint research and development on tyres and related technologies. Yokohama Rubber and Kumho Tire will start discussions on the details of the alliance (including methods for obtaining each other’s shares, the size of shareholdings, and the timing of acquisition) with the aim of signing a legally binding contract as early as possible.

Nothing has been said openly, but with companies outside the top five growing faster than ever, and yet without straightforward ways of getting to the top of the table acquisitional consolidation appears to be the order of the day. However, as we have seen from the Apollo Cooper saga this is far from straightforward. Either way the scent of synergy is in the air, leaving just the details of when and to what extent.

Kumho Tire, which was established in 1960, is headquartered in Gwangju, South Korea. In early 2005 Cooper Tire bought shares in Kumho for approximately US$107 million. This position was subsequently closed and the two companies’ cooperation didn’t go any further. Kumho, as you would imagine, is a core member of the Kumho Asiana Group, which also includes Asiana Airlines. Kumho Tire recorded consolidated net sales of 4,070.6 billion won in fiscal 2012. The company has eight tyre plants in South Korea, China, and Vietnam and employs about 11,000 people.

Yokohama Rubber was founded in 1917 and in fiscal 2012 (ended 31 December 2012), the company recorded consolidated net sales of 559.7 billion yen, with tyres accounting for 444.6 billion yen of the total. Yokohama Rubber operates 12 tyre plants (not including those currently under construction) in seven countries around the world and employs about 20,000 people globally.