Goodyear, Sumitomo Rubber Form Venture

Goodyear Tire & Rubber Co. formed a $1-billion alliance with Japan’s Sumitomo Rubber Industries Ltd. in which North America’s biggest tire maker would acquire 10% of Sumitomo and take control of its U.S. and European businesses, people familiar with the transaction said. Sumitomo Rubber spokesman Katsuhiro Katafuchi said the companies may announce the agreement today. Goodyear declined to comment. Goodyear and Sumitomo Rubber already make some tires for each other and together hold about 22% of the world’s tire market. The alliance would allow them to reduce costs by $300 million in three years, sources said. Tire makers’ inventories have swelled and prices stagnated amid a drop in demand from Latin America and Asia. Akron, Ohio-based Goodyear would pay Sumitomo Rubber about $1 billion in exchange for Sumitomo’s investments in the joint venture. Goodyear would buy about 10% of Sumitomo Rubber’s stock outstanding for about $89.3 million. Goodyear shares closed at $50.38, up 13 cents, on the NYSE.