Bridgestone, Toyo to form tyre alliance

16 May 2008

Bridgestone, the world's largest tyre maker and Toyo Tyre and Rubber Co have agreed to form a business alliance and cooperate in raw material procurement and production amid surging prices of rubber and oil.

Bridgestone, based in Tokyo, will also acquire an 8.7 per cent stake in Osaka-based Toyo, which in turn will purchase 0.5 per cent in Bridgestone, the two companies said in a statement.

The transfer of shares is scheduled for October 16, according to the statement.

The alliance would help the two companies source rubber and petroleum-based synthetic materials at lower prices and face market competition better.

''The tyre and the rubber industry is confronted with unprecedented changes in the business environment such as structural changes in demand due to bipolarisation of market into high performance products and general-purpose products, structural changes in competition due to emerging power with low-priced products, and structural changes in earnings due to steep rise of raw material cost,'' the two companies said.

''Under such environment, by effective use of strengths and business resources of Bridgestone and Toyo, this alliance is expected to create synergy-effect of additional corporate values for both Bridgestone and Toyo,'' it added.