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AKRON, Ohio - The Goodyear Tire (NASDAQ:GT) & Rubber Company (NASDAQ: GT) announced today it has finalized the sale of its off-the-road (OTR) tire business to The Yokohama Rubber Company, Limited. The all-cash deal, which was completed on Monday, is valued at approximately $905 million.
The divestiture marks a significant step in Goodyear’s strategic overhaul, as stated by CEO and President Mark Stewart. He emphasized that the transaction would streamline the company’s portfolio and enhance its focus on core products and services. Goodyear plans to allocate the proceeds from the sale towards reducing debt and funding aspects of its Goodyear Forward transformation plan. InvestingPro data shows the company currently carries a substantial debt burden of $10.06 billion, with a debt-to-equity ratio of 2.12.
Evercore served as the exclusive financial advisor, while Sullivan & Cromwell LLP provided legal counsel to Goodyear during the transaction.
Goodyear, headquartered in Akron, Ohio, is recognized as one of the largest tire manufacturers globally, with approximately 68,000 employees and operations spanning 53 facilities across 20 countries. The company is also known for its innovation centers in Akron and Colmar-Berg, Luxembourg, which aim to advance the technology and performance standard in the tire industry.
The completion of this deal is a part of Goodyear’s broader strategy to optimize its operations and focus on areas where it holds competitive advantages. However, the company’s forward-looking statements caution that various factors, many outside of its control, could impact its operations and the anticipated benefits from this transaction. InvestingPro analysis indicates that while the company is currently trading near its Fair Value, analysts project a return to profitability this year with an EPS forecast of $0.98. For deeper insights into Goodyear’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The sale is part of a series of strategic moves by Goodyear to adapt to the changing dynamics of the global tire industry and position itself for future growth. This information is based on a press release statement from The Goodyear Tire & Rubber Company.
In other recent news, Goodyear Tire & Rubber Co. has been active with a series of significant developments. The company recently reported its third-quarter earnings for 2024, achieving a segment operating income of $347 million and a 7.2% operating margin, despite a 6% decline in Q3 sales year-over-year. Goodyear’s retail business, however, experienced its best performance in over 15 years.
In a strategic move, Goodyear announced plans to sell its Dunlop brand to Japan’s Sumitomo Rubber Industries for approximately $700 million, a transaction expected to be finalized by mid-2025 pending regulatory approvals. The Dunlop sale is said to help Goodyear reduce its exposure to non-premium tires in the medium term, as noted by Morgan Stanley (NYSE:MS) analysts.
Meanwhile, Deutsche Bank (ETR:DBKGn) resumed coverage on Goodyear, issuing a Hold rating, and acknowledged the company’s efforts to improve its operations, but suggested a full turnaround may require more time than initially anticipated. The company also disclosed the departure of board member Prashanth Mahendra-Rajah, with no disagreements cited with the company’s operations, policies, or practices. These are some of the recent developments regarding Goodyear.
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