Goodyear Buys Cooper Tire in a Transformational $2.8 Billion Transaction

In a transaction estimated at $2.8 billion, Goodyear Tire & Rubber Co. announced that it’s buying Ohio-based rival tire manufacturer, Cooper Tire & Rubber Co.

“This is a transformational milestone for our companies,” said Rich Kramer, Goodyear Chairman, President, and CEO, in a conference call with analysts. He added that they would analyze what benefits will be achieved, including sales growth, and how they will optimize the combined output as they formulate business plans.

Goodyear said the deal’s initial cost benefits would come from combining corporate functions, procurement, and R&D. The company added that the inclusion of Cooper tires, would help merge two additional brand portfolios and consolidate its status as the world’s third-largest producer of retail tires. Goodyear is expected to expand access to local distributors and enable wider Cooper replacement tires in China, Akron, Ohio.

With Cooper, which was first established in Akron in 1914, Goodyear will boost its revenues once they onboard North America’s fifth-largest tire manufacturer. Cooper has about 10,000 employees worldwide. The corporations have said that no manufacturing jobs and production plants be abolished at first. They will work to find ways to use their combined production system.

Reports show that Goodyear was ranked third in North America in terms of tire sales revenue. It accrued $5.1 billion last year. Cooper reported almost $2.1 billion in North America in tire sales revenue.

So far, numerous industry experts have given the business deal a very positive response.

James Picariello said that Cooper shareholders will benefit from increased stock price, and in contrast, Goodyear will benefit from improving its marketing positions in China and the USA thanks to the powerful mid-level presence of Cooper. The deal will automatically contribute to Goodyear’s profits after it is completed.

James Picariello, KeyBancs analyst at Cleveland, in a message, said that Goodyear Tire’s purchase represented a rare instance of a flawless great deal which is a win for both companies.

In the trade journal, Modern Tire Dealer, industry expert John Healy and North coast Research Holdings said that Cooper’s addition provides Goodyear a chance to reconstitute its products to such an extent that it would not have been able to do otherwise. He said that it is too early to determine if there will be plant closures but “development alignments” are anticipated.

Both Goodyear and Cooper shares have grown tremendously. Cooper stocks ended at $56.64 rising by $12.87 or 29.4%. Goodyear’s stocks rose up by $2.92 or 21.1%, to a high of $16.82 for 52 weeks. Shares transacted were as high as $17.54 during the day. According to a press release, the two firms had around 17.5 billion dollars in total revenue sales in 2019.

Goodyear shareholders are expected to own approximately 84% of the joint tire business. From the merger, the company expects to have savings of about $165 million in a period of two years. The business deal is scheduled to be concluded by the second half of 2021 subject to regulatory and shareholder approvals.