Big news in the tyre sector as it was announced in February that the Goodyear Tire & Rubber Company had agreed to acquire the Cooper Tire & Rubber Company for around $US2.5 billion ($AU3.25 billion).

Goodyear says that the transaction will ‘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’.

Founded in 1914, Cooper is the 5th-largest tyre manufacturer in North America by revenue with approximately 10,000 employees working in 15 countries worldwide. Goodyear is the largest U.S. tyre manufacturer and the third-largest worldwide (behind Bridgestone and Michelin). 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.

For Goodyear, the transaction strengthens its position in the U.S., while growing its position in other North American markets and, significantly, in China, where the combination nearly doubles Goodyear’s presence and increases the number of relationships with local automakers.

Goodyear expects to achieve approximately $US165 million ($AU214 million) in synergies within two years following the close of the transaction.

The majority of those synergies, the company said, will be related to overlapping corporate functions and realising operating efficiencies.

“This is an exciting and transformational day for our companies,” said Richard J. Kramer, Goodyear chairman, chief executive officer and president. “The addition of Cooper’s complementary tyre 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.”

Source: Motor Trader e-Magazine (March 2021)

16 March 2021