The agreement gives Goodyear effective control of Sumitomo's U.S. and European operations and a minority stake in Sumitomo itself. Goodyear is also expected Wednesday to announce a series of moves to cut world-wide manufacturing capacity, although details of those actions couldn't be learned Tuesday.

Under the complex deal with Sumitomo, Goodyear will acquire 10% of the Japanese tire maker and pay Sumitomo $1 billion in return for its contributions to joint ventures it will form with Goodyear. Sumitomo will get a smaller stake in Goodyear.

The complex deal is the latest in a series of moves by U.S. companies to take advantage of the distress in Japan's industrial and financial sectors to shore up their global positions. Sumitomo, the No. 5 tire maker world-wide with about $4 billion in revenue, is saddled with debts that are close to $2.8 billion, compared to a market capitalization of just $1 billion.

The deal would be a coup for Goodyear Chief Executive Officer Sam Gibara, who has said he wants the Akron, Ohio company to expand annual revenues within five years to $20 billion to $23 billion from about $13 billion. The move will also shake up the balance of power in the tire business, which for nearly a decade has been dominated by France's Michelin SA and Japan's Bridgestone Corp. Like other suppliers to the auto industry, tire makers are struggling to maintain margins in the face of severe pricing pressure.

By consolidating key operations with Sumitomo and closing capacity, Goodyear hopes to regain some pricing power as it cuts costs.

Goodyear expects to get an additional $2.5 billion in annual revenue and an unspecified shot of additional earnings immediately after it takes control of Sumitomo's U.S. and European manufacturing operations through joint ventures, according to people familiar with the transaction.

Goodyear, with about 17% of the global tire market, will control about 22% of the market once the deal is completed, with a stronger No. 1 position in North America and a solid No. 2 position in the big European market.

In addition, Goodyear and Sumitomo will combine research and purchasing activities in joint ventures, people knowledgeable about the deal said. The purchasing joint venture and other restructuring could save a total of more than $300 million a year by the third year on the two companies' combined costs.

At the center of the Sumitomo-Goodyear agreement are six joint ventures.

The largest venture will combine 14 factories operated by Goodyear and Sumitomo in Western Europe. Goodyear will have 75% control of the venture, which will have a combined $4 billion in annual revenue. The venture will sell Goodyear brand tires as well as Sumitomo's Dunlop and Sumitomo brands.

A second venture will give Goodyear 75% control over Sumitomo's two U.S. factories in Huntsville, Ala. and Buffalo, N.Y. The facilities have about $800 million in sales.

Goodyear and Sumitomo will combine their global purchasing and research and development operations into two joint ventures that will be majority owned by Goodyear. In the research venture, Goodyear and Sumitomo will seek to eliminate duplicate product development efforts. Both companies, for instance, have tires that can run after they get flat. Eventually, the companies will likely sell the same run-flat technology.

There will be two joint ventures in the Japanese market, both controlled by Sumitomo. These will take over Goodyear's small Japanese marketing operations and will target auto makers and the replacement market.

Goodyear shares finished at $50.375, up 12.5 cents on the New York Stocks Exchange Tuesday. Sumitomo shares closed at 531 yen Tuesdy, down 10 yen from the previous close.