Goodyear, Cooper Tire CEOs say combined company benefits consumers

AKRON/FINDLAY, Ohio—Direct customers and consumers alike should reap the benefits of a combined Goodyear-Cooper Tire & Rubber Co. entity, according to the executives who helped orchestrate the $2.5 billion transaction.

Once Goodyear completes its integration of Cooper—the proposed megasale was announced before the start of business on Feb. 22, pending regulatory approval—the new company promises to offer a broader portfolio, improved service and delivery and more opportunity than ever before, according to Richard Kramer, CEO and president of Goodyear.

The move combines two Ohio-based companies that have been making tires for more than a century.

Speaking to members of the tire trade press Feb. 22, Kramer said the transaction is good news for independent tire dealers across North America.

"By being able to put our networks together, our products together, our offerings together, our services together, our OE pull that can come into those dealers along with a wide array of products there, I think that that service proposition actually gets better for them going forward because of the combination of these two companies," Kramer said.

"Dealers should feel good about it, and supply and service ought to be something that improves."

Cooper Present and CEO Bradley Hughes said he understands the uncertainty that comes with a transaction of this magnitude—Goodyear ranks third in global tire sales, based on 2019 figures, while Cooper sits at No. 13—but the opportunities far exceed the risk.

"I'd look heavily on the product side," Hughes said. "Forget about brand at this point. You think about the resources that are available to both companies to develop tires and to make sure we're bringing those to market very competitively, at a good pace, so there's fresh products out there all the time. I think this offers opportunity."

An integral part of that opportunity lies in an expanded Goodyear product portfolio, according to Kramer.

Goodyear will maintain its strategy of a Goodyear premium brand, bolstered by complementary Goodyear brands (Kelly, Dunlop) and Cooper brands (Cooper, Mastercraft and Mickey Thompson).

"As we think about what's happening in the tire industry, the competition out there, there is a benefit to having a combined portfolio of all these complementary brands to take care of customers in each of these market segments," Kramer said.

"We don't view these as necessarily replacing each other, but rather being complementary and offering that enhanced value proposition to our customers and consumers," he said.

"When we think about the Cooper brand, particularly Mastercraft in the light truck and SUV markets, the company has done a wonderful job of shifting up those premium products and being able to produce those. So that market position as a combined company is one we're going to take advantage of."

Kramer noted the Cooper portfolio enhances depth in the "highly profitable" light truck and SUV market.

"From our perspective it gives us a stronger financial foundation, with greater resources, an improved balance sheet," Kramer said. "It gives an opportunity to grow, and it gives us increased opportunities all around as a company to think about investing more into the future."

According to Kramer, the combined company will account for:

• $17.5 billion in revenue; and
• 200 million units produced yearly, including 64 million in the U.S.

Goodyear said combining Cooper's activities with its own should yield $165 million in savings through synergies over a two-year period.

Those saving synergies will be realized in selling, general and administrative expenses; research and development; distribution and warehousing; and procurement. Potential synergies in leveraging the respective manufacturing assets are still to be determined; Goodyear said no plant closings or personnel layoffs are expected.

At the same time, Goodyear said it expects to book expenses of $150 million to $175 million in order to achieve the referenced synergies.

Still to be determined is how the integration of the wholesale business, particularly the role that TireHub—the combined 50-50 joint venture wholesaler owned by Goodyear and Bridgestone Corp.—will play in the bigger company.

Kramer said a key element of his company's acquisition of Cooper's 10 tire plants worldwide is Cooper's assets in China, which would nearly double Goodyear's presence there, opening more opportunity for OEM business.

"Between the U.S. and China, that's where the growth and the lion's share of the global tire industry sits," Kramer said. "Clearly, a real benefit for us going forward."

Both executives said the integration should be easier since the companies have similar cultures.

"We believe it's a natural fit between (Akron-based) Goodyear and (Findlay-based) Cooper, a cultural fit," Kramer said.

"We believe that being two Ohio based 100-year plus companies that this is an organization that shares the same values. That's important for a lot of reasons. It really improves the integration opportunity going forward because we know integration is key to making sure we get the value from the deal we have here."