OSAKA, Japan (April 12, 2011) — Toyo Tire & Rubber Co. Ltd. is buying a 75-percent stake in China's Shandong Silverstone Luhe Rubber & Tyre Co. Ltd., which it will use to supply its global operations with radial truck tires.
Toyo will acquire the stake for $21.6 million from Malaysia's Lion Rubber Industries Sdn. Bhd., which helped set up the factory in Luzhou, Shandong Province, in 2004. Toyo expects the deal to close by mid-year.
The Shandong Silverstone plant is capable of producing up to 400,000 radial truck tires a year with 500 employees, Toyo said.
The Shandong Silverstone plant will complement Toyo's passenger tire factory under construction in Jiangsu Province, the company said, allowing it to meet strong demand in rapidly expanding markets in China and elsewhere. The goal, it added, is to “establish an optimal tire supply system, not only for China, but for all of our overseas markets.”
The deal fits into the company's strategy of improving its corporate value, Toyo said.
The tire maker plans to commence production of Toyo-brand tires at the new subsidiary as soon as practicable.
The deal comes just a few months after Toyo agreed to give up its shareholding in GTY Tire Co. in the U.S., which had been a key source of radial truck tires for the company for the past 22 years. Toyo had expected to source up to 290,000 truck tires from GTY this year.
For its part, Toyo Tire U.S.A. Corp. said it is “committed to supplying customers with quality commercial tires” and is working with it parent to assess all manufacturing options. “As our supply plans for the future are solidified, we will share them with our customers,” the firm said.
Shandong Silverstone generated $58.7 million in sales in 2010 but suffered operating and net losses of about $5.4 million, Toyo said.
Lion Rubber Industries is part of Malaysia's Lion Group, which also owned Silverstone Bhd., the Kamunting, Malaysia-based tire maker that Toyo acquired last October for about $155 million.