The Goodyear Tire & Rubber Company has completed its acquisition of Cooper Tire & Rubber Company, creating a decisive US-based leader in the global tyre industry,
Combining two leading tyre companies with complementary product portfolios, services, and capabilities will enable Goodyear to offer more options across the value spectrum, making it easier for customers and consumers to choose both the branded tyres.
Richard J Kramer, Chairman, CEO & President, Goodyear, said, “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.”
According to the company, the acquisition further strengthens Goodyear’s leading position in the US, while significantly growing 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 tyres through Goodyear’s network of 2,500 branded retail stores.
The combined entity will have the opportunity to leverage the strength of Goodyear original equipment 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.
Goodyear expects to achieve approximately $165 million in run-rate cost synergies within two years in terms of financial benefits. The majority of the cost synergies will be related to overlapping corporate functions and realising operating efficiencies. In addition, the combination is expected to generate a net present value of $450 million or more by utilising its available US tax attributes. These tax attributes are expected to reduce the company’s cash tax payments, positioning it to generate additional free cash flow.
Manufacturing and distribution
The company said opportunities for expansion of select Cooper facilities are expected to increase capital efficiency and flexibility. Besides, additional revenue growth opportunities are expected to result from the addition of the Cooper brand to Goodyear’s global distribution network.