NASHVILLE, Tenn.—It's been 25 years since Japan's Bridgestone Corp. purchased Firestone for $2.6 billion, but "acquisition" is a term those in Bridgestone circles don't like to use.
They much prefer the term "merger," according to Christine Karbowiak, an executive vice president of Bridgestone Americas Inc. who serves as chief administrative officer and chief risk officer of the Nashville-based subsidiary.
The deal to the outside world was seen as an acquisition—an original joint venture proposal was scrapped when Bridgestone offered $80 a share for Firestone to fend off a bid from Pirelli and Michelin. But Karbowiak said the word merger more accurately portrays what the firms have tried to accomplish in putting the two tire and rubber product firms together.
"Merger implies more of the idea that you come together and you share the best of each, as opposed to an acquisition that is kind of an imposition of one culture on the other," said Karbowiak, who joined the company in 1992, three years after the agreement was struck.
The genesis for the deal goes back years prior to 1988, she said. The industry had evolved from the radialization of the tire sector in Europe in the 1960s, which followed to the U.S. in the 1970s. That required a steep investment on behalf of the industry to shift manufacturing from bias to radial.
"Frankly, Firestone was not in a position to take that step," Karbowiak said. "And that, combined with some other difficulties that it ran into, kind of put it in a challenging position."
Bridgestone, on the other hand, faced a dilemma of its own. The tire business in the 1980s was undergoing a consolidation, with some smaller players joining with larger ones in order to invest in new technologies.
The Japanese firm was a high-tech, well-respected company. It was a strong regional player with strong management and a strong balance sheet. But it didn't have the iconic name as Firestone, and it lacked the U.S. firm's global reach.
When you are a moderately sized business with the attributes of Bridgestone in a globalizing environment, that also made it a prime acquisition target itself.
"You combine that fact with the vision that Bridgestone had to become a global player, and it was clear that some sort of alliance with another industry player was critical," Karbowiak said. "You needed to create that global footprint, and you can't do it organically fast enough to protect yourself."
So a deal with Firestone became the focus. The firms shared little overlap as far as where facilities were located. Bridgestone was strong in Asia, but not so much in North America. On May 5, 1988, the deal was closed, and Bridgestone had taken a giant first step in its globalization efforts.
Current Bridgestone Corp. CEO Maasaki Tsuya refers to the 1988 marriage with Firestone as the Japanese company's "second foundation," the first being when Shojiro Ishibashi founded the firm in 1931.