Global trends: A good year for Goodyear

Goodyear completes acquisition of Cooper; increases scale to support investments in new mobility and fleet solutions

By:June 12, 2021 8:26 AM
Goodyear Tire & Rubber Company said it has completed acquisition of Cooper Tire & Rubber Company

Earlier this week Goodyear Tire & Rubber Company said it has completed acquisition of Cooper Tire & Rubber Company, finalising the merger agreement made public on February 22 this year. “This combination strengthens Goodyear’s ability to serve more consumers globally and provides increased scale to support greater investments in new mobility and fleet solutions,” said Richard J Kramer, Goodyear chairman, CEO and president.

This tie-up is expected to benefit Goodyear in multiple ways.

Strengthen Goodyear’s position in global tyre industry: While it strengthens Goodyear’s leading position in the US and helps grow its position in other North American markets, it also nearly doubles Goodyear’s presence in China—the world’s largest tyre market.

Complementary benefits: The combined company can leverage the strength of Goodyear original equipment and premium replacement tires, along with the mid-tier power of the Cooper brand.

Synergies and tax benefits: Goodyear expects to achieve $165 million in run-rate cost synergies within two years. The majority of cost synergies will be related to overlapping corporate functions and realising operating efficiencies.

Earnings and balance sheet: The acquisition is expected to be accretive to earnings per share within the first full year following closing, modestly improves Goodyear’s balance sheet position, and enhances the company’s ability to de-lever.

Create additional value: Opportunities for expansion of select Cooper facilities are expected to increase capital efficiency and flexibility. Additional revenue growth opportunities are expected to result from the addition of the Cooper brand to Goodyear’s global distribution network.

New mobility solutions: As an industry leader in the US, the combined company will offer tyre products and a broad selection of services through Goodyear’s relationships with traditional and emerging original equipment manufacturers; autonomous driving system developers; new and established fleet operators; and other mobility platforms.

Founded in 1914, in Akron, Ohio (once the rubber capital of the world), Cooper was one of the oldest tyre companies in the world. Later it shifted its headquarters to Findlay, Ohio. Goodyear was also founded in Akron, Ohio, in 1898.

Continental (Germany) and Pirelli (Italy), founded in 1871 and 1872, respectively, are the oldest tyre companies of the world.

(Because Cooper wasn’t operating in India, this acquisition is not expected to lead to any direct changes in Goodyear’s India operations.)

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