Goodyear Tire & Rubber Company is buying rival company Cooper Tire in a $2.8 billion transaction.
On Monday, Feb. 22, Akron, Ohio-based Goodyear announced that it had entered into a definitive agreement to acquire Cooper Tire & Rubber Company. This transaction is expected to expand Goodyear’s product offering and bolster its manufacturing capacity and distribution.
According to Goodyear, the combined company will have $17.5 billion in pro forma 2019 sales.
“This is an exciting and transformational day for our companies,” Goodyear chairman, president and CEO Richard J. Kramer said in a statement. “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.”
Under this cash and stock transaction, Cooper shareholders will receive $41.75 per share in cash and 0.907 shares of Goodyear common stock per Cooper share. This results in a total equity value of roughly $2.8 billion. Once the transaction closes, Goodyear shareholders will hold 84 percent of the combined company with Cooper shareholders at approximately 16 percent.
Cooper is the fifth-largest tire manufacturer in North America by revenue, according to a Goodyear news release. The company operates 10 facilities, including one in Texarkana, Ark., and employs approximately 10,000 individuals.The company also operates plants in Clarksdale and Tupelo, Miss.; Kruševac, Serbia; Melksham, England; and Findlay, Ohio; as well as plants in Mexico and China. It offers products under the Cooper, Mastercraft, Roadmaster and Mickey Thompson brand names.
In 2020, Cooper Tire saw its global unit volume decrease by 13 percent compared to 2019, while its net sales decreased from $2.75 billion to $2.52 billion. However, the company’s operating profit was $231 million in 2020 compared to 2019’s operating profit of $174 million.
The transaction, which is subject to closing conditions and regulatory approval, is expected to close in the second half of 2021. Once the transaction is finalized, the combined company will be headquartered in Akron while maintaining a presence in Cooper Tire’s headquarters of Findlay, Ohio.