AKRON—Goodyear has placed its Engineered Products division, a $1.5 billion a year business, on the selling block because it´s a non-core operation.
Goodyear "will consider the sale of the business to a buyer that will recognize the considerable value of the business and its associates while maintaining Goodyear´s level of service to customers," Robert J. Keegan, Goodyear chairman and CEO, said in a prepared statement.
J.P. Morgan Securities Inc. and Goldman, Sachs & Co. have been brought in by the company to serve as financial advisers on the sale.
The company didn´t indicate what value it anticipates receiving for the unit. Two recent industry divestitures, however, provide a possible comparison: Cooper Tire & Rubber Co. sold its Cooper-Standard Automotive unit—a $1.66 billion per year business—for $1.17 billion, and GenCorp Inc. sold its GDX Automotive unit—a $786 million a year business—for $147 million.
The United Steelworkers, which represents 2,250 members at seven Engineered Products plants in the U.S., said it will monitor closely Goodyear´s exploration of the sale of the business.
Goodyear´s agreement with the union contains successor language, which calls for a buyer to recognize the USW as the workers´ bargaining representative. A buyer also would need to negotiate a new labor contract with the USW prior to completing the purchase.
"While Engineered Products is performing well, it is a non-core operation for Goodyear," Keegan said. "As we continue to build on the considerable progress we have made in recent years, we believe the best course of action is to focus all of our resources on the growth of our core consumer and commercial tire businesses."
Led by President Tim Toppen, the business has achieved year-over-year growth in both sales and earnings in 2002, 2003 and 2004.
Toppen said the decision to explore the sale of the business won´t interfere with its focus on daily operations. "The cornerstone of our operating philosophy stays intact—we want to help our customers grow their businesses for the long term," he said.
Goodyear Engineered Products manufactures and markets engineered rubber products for industrial, military, consumer and transportation original equipment end-users. Its product portfolio includes hose, conveyor belts, power transmission products, molded products and air springs.
In 2004, the business had sales of about $1.5 billion and segment operating income of $113 million. It has 30 facilities worldwide and has around 7,000 employees.