Bridgestone Corp. and Toyo Tire & Rubber Co. Ltd. have entered into a "business and capital alliance." Toyo will issue 20 million shares of new ordinary stock and allocate it to Bridgestone. That will give Bridgestone 8.72% of all outstanding stock, including this issue.
Bridgestone will allocate 3.9 million shares of its treasury stocks (0.48% of issued stocks) to Toyo Corp.
"In order for Bridgestone and Toyo to discuss and pursue business alliances under a stable relationship with mutual trust, the two companies decided to establish a capital alliance," said the companies in a joint statement.
The Japanese competitors "agreed to pursue consultation in business alliances" as well.
"In recent years, the tire and the rubber industry has been confronted with unprecedented changes in the business environment, such as structural changes in demand due to bipolarization of the 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 the steep rise of raw material cost," said the companies in an official press release.
"Under such an environment, by effective use of the strengths and business resources of Bridgestone and Toyo, these alliances are expected to create a synergy-effect, which will bring additional corporate values for both Bridgestone and Toyo."
Bridgestone and Toyo outlined the business alliances as follows:
1. Production-technology development: "To study advanced production technology, including co-development of new production methodology and machineries."
2. Procurement of raw materials, other materials and equipment: "To study more competitive method of procurement by utilizing the supply and procurement capacities of Toyo and Bridgestone."
3. Cross production between Bridgestone and Toyo: "To seek... synergies in economy of scale in production, merits in distributions, and utilization of spare production capacities."
4. Logistics: "To seek for cooperation in logistics at global level."
5. Business other than tires: "To study possible synergies in common business areas other than tires."
The parties added that the business alliances will be discussed and decided upon more specifically at a later date.
Regarding the alliance with Bridgestone, I have been asked to send you the following statement from Mr. , president and chief executive officer of TOYO TIRE & RUBBER CO., LTD:
"Toyo Tire is very proud to partner with Bridgestone, a global leader in the tire industry," says Kenji Nakakura, Toyo's CEO and president. "We have great respect for their passion, their creativity and their innovative spirit.
"We feel this new alliance will greatly benefit both companies, and we look forward to a long, prosperous relationship with Bridgestone."
