Goodyear to acquire Cooper Tires for RM10.3 billion

The Goodyear Tire & Rubber Company recently announced that it would buy the Cooper Tire & Rubber Company in a deal valued at USD2.5 billion (around RM10.3 billion), which is expected to completely in the second half of 2021.

Upon the closing of the transaction, Goodyear will own approximately 84% of the combined company, with Cooper holding the remaining 16% of equity. The combined company will be headquartered in Akron, Ohio, although Goodyear will still maintain a presence in Findlay, the site of Cooper’s headquarters.

The acquisition will expand Goodyear’s product offering by combining two portfolios of complementary brands. In an official release, Goodyear said the combined company will generate about USD17.5 billion (around RM71.9 billion) in pro forma 2019 sales, with sales volume of around 200 million. The combined company will benefit from Goodyear’s original equipment and premium replacement tyres, along with the Cooper’s growing foothold in the light truck and SUV segments.

This will allow Goodyear to not only strengthen its leading position in the United States, but also expand its reach in other North American markets. Beyond these regions, the transaction will nearly double Goodyear’s presence in China and increase the number of relationships with local automakers, while creating broader distribution for Cooper replacement tyres through Goodyear’s network of 2,500 branded retail stores.

“This is an exciting and transformational day for our companies,” said Richard J. Kramer, chairman, CEO and president of Goodyear. “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.

“Cooper has transformed into a dynamic, consumer-driven organisation 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 proud of what our team has accomplished over the past 107 years and am grateful to our talented employees for their contributions and commitment,” commented Brad Hughes, president and CEO of Cooper.

In terms of financial benefits, Goodyear expects approximately USD165 million (around RM678 million) in run-rate cost synergies within two years after the deal is completed. Furthermore, a net present value of USD450 million (around RM1.85 billion) or more projected by utilising Goodyear’s available US tax attributes, with further benefits coming from manufacturing-related savings.

“Cooper is a heritage brand in the tyre industry with particular strength in light truck and SUV tyre segments. Both Goodyear and Cooper can achieve synergy with this acquisition. Cooper’s products will complement Goodyear’s existing product portfolio and their manufacturing assets can also enhance Goodyear’s manufacturing capabilities and capacity,” said Alex Ng, managing director of Goodyear Malaysia.

“Cooper can also enjoy wider distribution of their replacement tyres through Goodyear’s branded retail stores. We are happy to have Cooper on board with us at Goodyear and look forward to future development and production of top-quality tyres at an international level, to be continuously provided to our customers here in Malaysia,” he continued.

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