ERJ staff report (R&PN)
Akron, Ohio - Titan International Inc.'s option to buy Goodyear's European farm tyre business expired Nov. 30 without action by either side, leaving Titan to pursue other options for expansion and Goodyear to deal with a business it has been trying to sell for more than two years.
Goodyear put its European and Latin American farm tyre businesses up for sale in May 2009. Titan agreed in December 2010 to buy both businesses and closed on the Latin American assets - a plant in Sao Paulo, Brazil, property, equipment and inventories - in March.
The deal for the European business was contingent upon Goodyear's being able to complete a social plan related to the previously disclosed phase-out of consumer tyre production at a plant in Amiens, France, Goodyear and Titan have said in the past.
This required consultation with various works councils.
â€œIt shows how screwed up things are in France when a company tries to save jobs,â€ said Titan Chairman and CEO Maurice Taylor.
â€œTitan has other acquisitions that have been on hold while the put option was still active. Now Titan will pursue those options instead of waiting for the French union to start thinking about their members,â€ he said.
â€œTitan spent a lot of time and money trying to get Goodyear's social plan approved but only a non-business person would understand the French labor rules. The French workers are very good at what they do when they work but as I told the union personnel, you cannot get paid seven hours for three hours of work.â€
The purchase price was expected to be about $17 million, Goodyear said. Titan said the terms of the deal also included $13 million in prepaid royalty payments, bringing the total cost to $30 million.
Titan Chairman and CEO Maurice Taylor Jr. estimated earlier that the business represents about $400 million in annual revenue short term.
It's unclear at this time what Goodyear will do with the business now that the deal has fallen through.
Titan bought Goodyear's North American farm tyre business, including a plant in Freeport, Ill., in 2005.
Titan will announce guidance goals for 2012 on Dec. 9 with a conference call to follow to answer any questions on Dec. 13.
Goodyear Dunlop Europe said it remains committed to exiting the European/Middle East/Africa farm tyre business.
"Though TitanÂ´s option to purchase expired on November 30, we will continue our efforts to sell the business and our Amiens North factory to Titan or other interested parties," the company said.