Goodyear Tire & Rubber Company and Cooper Tire & Rubber Company have entered a definitive transaction agreement under which Goodyear will acquire Cooper for approximately $2.5 billion (Rs 18,502 crore).
The transaction will expand Goodyear’s product offering by combining two portfolios of complementary brands. It will also create a stronger U.S.-based manufacturer with increased presence in distribution and retail channels while combining both companies’ strengths in the highly profitable light truck and SUV product segments.
The combined company will have approximately $17.5 billion in proforma 2019 sales.
Founded in 1914, Cooper is the fifth-largest tyre manufacturer in North America by revenue with approximately 10,000 employees working in 15 countries worldwide. Cooper products are manufactured in 10 facilities around the globe, including wholly-owned and joint venture plants. The company’s portfolio of brands includes 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. “The addition of Cooper’s complementary tire product portfolio and highly capable manufacturing assets, coupled with Goodyear’s technology and industry leading distribution, provides the combined company with opportunities for improved cost efficiency and a broader offering for both companies’ retailer networks. We are confident this combination will enable us to provide enhanced service for our customers and consumers while delivering value for shareholders.” Kramer added, “We have a great deal of respect for Cooper’s team and share a commitment to integrity, quality, agility and teamwork. We look forward to welcoming Cooper to the Goodyear family.”
Brad Hughes, Cooper president and CEO, added, “Cooper has transformed into a dynamic, consumer-driven organization that has balanced traditional and emerging channels to increase demand for our products, while updating and effectively leveraging our global manufacturing footprint. I am extremely Goodyear to Acquire Cooper, creating a stronger U.S.-based leader in the global tire industry. We look forward to the opportunity to combine 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.”
While the acquisition strengthens Goodyear’s leading position in the US and also its position in other North American markets, in China, the combination nearly doubles Goodyear’s presence and increases the number of relationships with local automakers, while creating broader distribution for Cooper replacement tires through Goodyear’s network of 2,500 branded retail stores.
The combined company will have the opportunity to leverage the strength of Goodyear OE and premium replacement tyres, along with the mid-tier power of the Cooper brand, which has particular strength in the light truck and SUV segments.
Synergies estimated at $165 million by 2023
Goodyear expects to achieve approximately $165 million in run-rate cost synergies within two years following the close of the transaction. The majority of the cost synergies will be related to overlapping corporate functions and realizing operating efficiencies. In addition, the combination is expected to generate net present value of $450 million or more by utilizing Goodyear’s available U.S. tax attributes.