Sumitomo After 1.8% Stake in Stamford Tyres

Sumitomo Rubber Industries, Ltd. SRI is to purchase a 1.8 per cent stake in international tyre and wheel distributor, Stamford Tyres Corporation Limited. Subject to the approval from the Singapore Stock Exchange, Stamford Tyres announced 21 September that it will issue SRI 4.3 million new shares at a price of S$0.35 per share.

Net proceeds from the placement, after deducting expenses of S$100,000, are said to be approximately S$1.4 million (£674,522; 793,471 euros; US$1.054 million) According to the company, the net proceeds will be used to fund the group’s working capital needs in South Africa.

“Over the years Sumitomo Rubber Industries has been encouraged by our growth and our initiatives to promote its Falken brand tyres in Asia. As we embark on our expansion plan in South Africa, we are delighted to have the support from Sumitomo Rubber Industries and would like to welcome them as one of our valued shareholders” said Wee Kok Wah, president and CEO of Stamford Tyres.

“We have a long-term relationship with Stamford Tyres in the Asian Market and have requested that they promote our Falken brand tyres in South Africa last year. We view Stamford Tyres as a key partner to the growth of our Falken brand in South Africa and believe that this 1.8 per cent stake in Stamford Tyres will strengthen our relationship further,” Yasutaka Ii, executive officer of Sumitomo Rubber Industries, Ltd. and president of SRI Tire Trading Ltd commented.

Stamford Tyres has been distributing SRI’s Falken brand tyres since 1975. According to the company, In the three months ended 31 July 2010 (the first quarter of the company’s current 2011 financial year), the sales from Falken tyres accounted for approximately 39 per cent of the group’s revenue. Currently the Stamford distributes Falken tyres in Singapore, Malaysia, Thailand, Indonesia, Brunei, China, India, South Africa, Mauritius, Vietnam, Myanmar and New Caledonia. The latest foray into the South African market reportedly piqued the interest of SRI. In Feburary 2009, the group was appointed as Falken distributor and officially launched the brand in October 2009. In the first quarter 2011, Stamford’s South African business contributed 11 per cent of the group’s revenue.

Wee Kok Wah concluded: “The South African market is a relatively new one for us, but one that we have made good progress. The Falken brand is well received by the South Africans, who appreciate premium, high-performance tyres. The potential for the region is huge, with a growing vehicle population of 9.7 million.”

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