Goodyear Tire & Rubber Co. has reduced its share of Sumitom Rubber Industries Ltd. (SRI) from 10% to 1.5% as part of its ongoing plan to enhance its financial flexibility.
Goodyear, which acquired a 10% ownership of Sumitomo as part of a nearly $1 billion "global alliance" between the companies in 1999, sold 20.83 million of its shares for $83.4 million. Sumitomo bought 97.6% of those shares.
Goodyear said it will use most of the proceeds of the transaction to reduce debt.
"Our alliance and partnership with Sumitomo remains strong," says Bob Keegan, Goodyear's CEO and president. "Our joint ventures are successful." (The companies have six joint ventures, including tire manufacturing and sales operations in North America and Europe.)
Goodyear says it will take a non-cash charge
of approximately $10 million related to the transaction in the second quarter.
In February of 1999, Goodyear and Sumitomo Rubber entered into a joint venture that essentially gave Goodyear a 75% interest in Dunlop Tire in the United States and Europe, a 25% interest in Dunlop's Japanese subsidiary, and a 10% interest in SRI. In addition to $936 million, Sumitomo received a 1.5% stake in Goodyear.
