Japan’s Sumitomo Rubber Industries (JP:5110) announced the acquisition of the Dunlop brand from the U.S.-based Goodyear Tire & Rubber Company (GT) for $701 million in cash. Through this acquisition, Sumitomo Rubber will acquire the Dunlop brand and its trademarks in Europe, North America, and Oceania. The company already markets Dunlop-brand tires in Japan and parts of Asia. Following the announcement, Sumitomo Rubber shares gained 1.77%, while Goodyear rose 2.44%.
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Sumitomo Rubber is a rubber manufacturing company that produces a range of products, including automobile tires, sports balls, etc. Meanwhile, Goodyear is an American tire manufacturing company, catering to passenger cars, aircraft, commercial trucks, military and police vehicles, and more.
Sumitomo Rubber Targets Global Expansion with Dunlop
This acquisition will enable Sumitomo Rubber to broaden its global reach by supplying tires to automakers worldwide. Additionally, the company expects that the strong reputation of the Dunlop brand will boost its global competitiveness and premium product sales.
Meanwhile, Goodyear stated that the deal will enable it to concentrate on expanding its core brands.
According to the terms of the agreement, Goodyear will keep selling Dunlop-branded passenger car tires in Europe through at least December 31 this year and will pay a royalty to Sumitomo Rubber. Goodyear will also supply some Dunlop-branded tires to Sumitomo in Europe for the next five years. Additionally, Goodyear plans to let Sumitomo use the Dunlop trademark for truck tires in Europe for a long period and will pay royalties on sales.
The transaction is expected to be completed by mid-2025, contingent on regulatory approvals.
Sumitomo Rubber Industries Share Price Forecast
According to the TipRanks consensus, 5110 stock has received a Moderate Buy rating backed by two Buy and two Hold recommendations. The Sumitomo Rubber share price forecast is ¥1,978.85, which is 11.8% above the current price level.
