AKRON—Goodyear has officially closed the deal to purchase the Cooper Tire & Rubber Co.
The companies announced the finalizing of the merger agreement Monday morning, after agreeing to the $2.5 billion cash-and-stock purchase on Feb. 22.
The combination brings together the world's No. 3 tire maker, with global sales of $13.7 billion in 2019, with Cooper, the No. 13 tire maker with $2.8 billion.
"We are excited to officially bring Goodyear and Cooper together and unite our shared focus on customers, innovation and high-quality products and solutions. 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," Richard J. Kramer, Goodyear chairman, chief executive officer and president, said.
Goodyear said the combined company will offer more options across the value spectrum, making it easier for customers and consumers to choose Goodyear- and Cooper-branded tires.
According to the Akron-based tire maker, the acquisition further strengthens Goodyear's position in the U.S., while significantly growing its position in other North American markets.
The combination nearly doubles Goodyear's presence while increasing relationships with local auto makers, while creating broader distribution for Cooper replacement tires through Goodyear's 2,500 branded retail stores.
Goodyear said it expects to see approximately $165 million in run-rate cost synergies within two years, the majority related to overlapping corporate functions and realizing operating efficiencies.
The combination is expected to generate net present value of $450 million or more with Goodyear's available U.S. tax attributes. Goodyear said these tax attributes are expected to reduce the company's cash tax payments, positioning it to generate additional free cash flow.
The expected cost synergies do not include manufacturing-related savings.
Goodyear said the acquisition is expected to be accretive to earnings per share within the first full year following closing, which "modestly improves Goodyear's balance sheet position and enhances the company's ability to de-lever."
The deal also allows Goodyear to expand capacity and capital efficiency at several Cooper facilities. Goodyear said it expects increased revenue growth as a result from the addition of the Cooper brand to Goodyear's global distribution network.
The is a developing story. Check back at rubbernews.com for updates.