Bridgestone to Buy 8.7% Share in Toyo Tire

Bridgestone Corporation has agreed to buy an 8.7 per cent stake in Toyo Tire & Rubber Co., Ltd., with Toyo reciprocating by buying a 0.5 per cent share of Bridgestone. Describing the moves as “business and capital alliances,” the Japanese tyre and rubber product manufacturers explained that moves are part of an agreement designed to help both companies syngergise in procurement and production. The transfer of shares is scheduled for Oct. 16, according to the statement. There are currently no details of whether or not the two J
Japanese tyre and rubber product manufacturer’s deal will extend beyond the announced share swap.

Bridgestone’s statement said the alliances are a result of the “bipolarization of market into high performance products and general-purpose products, structural changes in competition due to emerging power with low-priced products, and structural change in earnings due to steep rise of raw material cost.”

Bloomberg quoted Credit Suisse Group analyst Toru Iwai as saying: “Toyo Tire will be the greater beneficiary as its earnings are getting hammered.”

According to a Bridgestone statement on the alliances, the exact details of the cooperation between Bridgestone and Toyo will be discussed by project teams, which are being immediately compiled. Here are the main areas for the business alliance:

• Production-technology Development – the advanced production technology including co-development of new production methodology and machineries.
• Procurement of Raw Materials, Other Materials and Equipments – studying more competitive methods of procurement by utilizing the supply and procurement capacities of Toyo and Bridgestone
• Cross Production between Bridgestone and Toyo – synergies in economy of scale in production, merits in distributions, and utilization of spare production capacities
• Logistics – seeking to cooperate in logistics at global level

In order for Bridgestone and Toyo to discuss and pursue business alliances under stable relationship with mutual trust, the two companies decided to establish a capital alliance. Toyo will issue new ordinary share of 20 million stocks (8.72% of the issued stocks including this issue) and allocate all shares to Bridgestone Corporation and Bridgestone will take all. On the other hand, Bridgestone will allocate 3.9 million of its treasury stocks (0.48 per cent of issued stocks) to Toyo Corporation and Toyo will take all.