Goodyear Tire & Rubber Co. is acquiring Cooper in a deal with an equity value of $2.8 billion that will combine the two-century-old Ohio manufacturers.
According to Goodyear; the transaction will expand the Akron rubber tire marker’s product offering and also create a “stronger U.S.-based manufacturer with an increased presence in distribution and retail channels; while combining both companies’ strengths in highly profitable light trucks and SUV product segments.”
“The addition of Cooper’s complimentary tire product portfolio and highly capable manufacturing assets, coupled with Goodyear’s technology and industry-leading distribution, provide 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” said Richard J. Kramer, Goodyear chairman, chief executive officer, and president, in the deal’s announcement.
Goodyear said Monday it will pay about $2.8 billion in cash and stock for its smaller rival; including $41.75 a share in cash for Cooper’s shares; which rose about 30% to $56.86 in late morning trading. Goodyear’s shares increased 22% to $16.97.
Upon closing of the transaction; Goodyear shareholders will own approximately 84% of the combined company, and Cooper shareholders will own approximately 16%.
subsequently, The combined company would generate annual revenue of roughly $17.5 billion and have some 72,000 employees globally; according to an investor presentation. Cooper’s tire brands include its namesake line and Mastercraft.
Cooper, founded in 1914, is the 5th largest tire maker in North America based on revenue. The company has about 10,000 employees in 15 countries. In addition to the Cooper brand, it also owns Mastercraft, Roadmaster, and Mickey Thompson. For Goodyear, the bigger company, the deal will nearly double its presence in China.