Two of the biggest remaining American-owned and based tire manufacturers are joining forces. Akron-based Goodyear Tire and Rubber Co. is acquiring Findlay, Ohio-based Cooper Tire in a deal with an equity value of $2.8 billion that will combine the two century-old companies.
In a deal approved by the boards of both companies, Akron will remain the headquarters for the combined company, but a presence in Findlay will be maintained. The entity's global footprint includes 56 factories around the world with more than 70,000 employees.
Cooper Tire, founded in 1914, employs an estimated 10,000 people in 15 countries. It has 10 manufacturing plants where it makes brands including Cooper, Mastercraft, Roadmaster and Mickey Thompson. Its revenues rank it 5th among North American tire manufacturers.
“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," said Goodyear CEO Richard J. Kramer in a statement.
Kramer said the deal will allow the new company to enhance customer service while also delivering value for shareholders.
The Akron Beacon Journal reports a conference call indicated the company expects to realize $165 million in savings over a two-year period by reducing corporate and research & development functions that are duplicative. There are no plans at this point to close factories or reduce manufacturing jobs.
Cooper Tire CEO Brad Hughes says the company is entering the deal "from a position of strength." In the statement, he said Cooper has increased demand for its products with a consumer-driven focus, and the deal begins a new chapter for the company.
"We believe that it represents an attractive opportunity to maximize value for our shareholders, who will receive a meaningful premium as well as the opportunity to participate in the upside of the combined company," Hughes said.
Terms of the deal call for Cooper shareholders to receive cash and stock totaling $54.36 per share ($41.75 per share in cash). Under the terms, Goodyear shareholders will own about 84% of the combined company, with Cooper shareholders owning about 16%.