Akron, Ohio / Findlay, Ohio – Goodyear Tire & Rubber Co. is to acquire Cooper Tire & Rubber Co. for approximately $2.5 billion (€2.1 billion), under a deal approved by the boards of both companies.
The deal will create a $17.5-billion-turnover tire maker “with increased presence in distribution and retail channels while combining… strengths in the highly profitable light truck and SUV product segments.”
Cooper shareholders will receive $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper share for a total equity value of approximately $2.8 billion.
Subject to customary closing conditions, including regulatory approvals and the approval of Cooper shareholders, the transaction is expected to close in the second half of 2021.
For 2020, Goodyear reported a ‘segment operating loss’ of $14 million, on net sales down 16% year-on-year to $12.3 billion. The loss contrasted with operating earnings of $959 million posted a year ago.
For its part, Cooper reported 2020 net sales of $2.52 billion compared to a prior-year $2.75 billion. Operating profit came in at $231 million, compared to $174 million in 2019.
Goodyear expects $165 million in run-rate cost synergies within two years, mostly around “overlapping corporate functions and realising operating efficiencies.” It also anticipates tax-related gains of around $450 million as well as manufacturing-related savings.
Furthermore, Goodyear said opportunities for expansion of certain Cooper facilities will increase capital efficiency and flexibility as well as growth from adding the Cooper brand to its global distribution network.
After closing, the combined company will be headquartered in Akron, Ohio, but Goodyear expects to maintain a presence in Findlay, Ohio.
Founded in 1914, Cooper is the fifth-largest tire manufacturer in North America by revenue with around 10,000 employees working in 15 countries worldwide.
Cooper has 10 manufacturing plants worldwide, including wholly-owned and JV plants, producing tire brands including Cooper, Mastercraft, Roadmaster and Mickey Thompson.
“This is an exciting and transformational day for our companies,” said Richard J. Kramer, Goodyear chairman, CEO and president.
Combining Cooper’s product portfolio and manufacturing assets with Goodyear’s technology and distribution, said Kramer, will generate “opportunities for improved cost efficiency and a broader offering for both companies’ retailer networks.”
For Cooper, president & CEO Brad Hughes the transaction “marks the start of a new chapter for Cooper, which we are entering from a position of strength.”
Adding Cooper’s “considerable talents with Goodyear’s, and to be part of a bigger, stronger organization that will be competitively well-positioned to win in the global tire industry.”
The companies issued this joint statement on 22 Feb.