$2.8 Billion Business Deal
Both companies are in the tire and rubber manufacturing business, with significant market share. Each company accounts for the top two tire manufacturers in the US. Additionally, Goodyear is the third-largest tire business in the world, behind France’s Michelin and Japan’s Bridgestone.
Goodyear released a statement that said the business is securing a deal with Cooper, one of their competitors in the US, to buy out the company for $2.8 billion. This new company merger will strengthen the North American and Chinese presence for each company. China currently holds the world’s top car market, making it the perfect opportunity to expand Goodyear’s reach as China and the US account for nearly one-third of the global tire industry volume.
In the press release, Richard J. Kramer, Goodyear chairman, chief executive officer and president said, “...We are confident this combination will enable us to provide enhanced service for our customers and consumers while delivering value for shareholders.” He added, “We have a great deal of respect for Cooper’s team and share a commitment to integrity, quality, agility and teamwork. We look forward to welcoming Cooper to the Goodyear family.”
Furthermore, as a result of this transaction, the combined business will have $17.5 billion in pro forma 2019 sales. Through Goodyear’s network, Cooper will gain access to over 2,500 retail stores and equipment.
The deal between each company has not been completely solidified, but it is expected to close in the second half of 2021.
About the Tire Industry
The top three leaders in the tire manufacturing industry are Japan’s Bridgestone, France’s Michelin, and the US’s Goodyear. Each business holds a massive market share in their respective regions. Tires are a necessity for car owners around the world, making it an enticing deal for the tire business giant.
In 2014, there were an estimated 1.2 billion vehicles on the road. Furthermore, projections are expected to reach 2 billion by 2035. According to the US Tire Manufacturers Association, US tire shipments in 2019 equaled about 332.7 million.
The global automotive tire market was worth $112.16 billion in 2019 and is projected to reach $154.4 billion by 2027 — a CAGR of 4.1%. That said, the COVID-19 pandemic affected the tire industry greatly as manufacturers were shut down, decreasing demand for replacement tires and original equipment.
The deal between Goodyear and Cooper is an opportunity for each company to grow and expand market share to capitalize on this lucrative industry.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.