Investing.com — Goodyear Tire (NASDAQ:) & Rubber has introduced plans to promote its Dunlop model to Japan’s Sumitomo Rubber Industries for roughly $700 million.
Goodyear shares rose 1.8% in pre-market commerce.
The Ohio-based tiremaker confirmed on Tuesday that it has agreed to switch the Dunlop emblems and intangible belongings in Europe, North America, and Oceania to the Japanese rubber product producer.
The deal includes the sale of Dunlop belongings associated to shopper, business, and different specialty tires. Sumitomo Rubber pays Goodyear about $701 million upon closing. This cost contains the price of transferring the Dunlop model throughout the related areas, sure transition-related charges, and the acquisition of Dunlop tire stock.
Goodyear has said it plans to make use of the proceeds from the sale to scale back its monetary leverage and fund different initiatives. This choice to promote the Dunlop model comes after a strategic evaluation of the model was performed.
Completion of the transaction depends on regulatory approvals and is anticipated to be finalized by mid-2025.
In 2023, Dunlop shopper tire gross sales totaled $532 million, whereas business tire gross sales reached $201 million, in accordance with Goodyear. As a part of the settlement, Goodyear will retain sure rights to the Dunlop model.
Particularly, it’ll license again the Dunlop emblems for truck tires in Europe and hold its rights to the Dunlop emblems for its bike tire companies in Europe and Oceania.
“This transaction helps Goodyear scale back its publicity to non-premium tires within the medium time period, a phase the place tire manufactures are persevering with to face trade headwinds. In the long run, a key query might be how Goodyear can use its spare capability following the completion of the offtake interval and the magnitude of capex required for re-tooling,” Morgan Stanley (NYSE:) analysts wrote within the observe.
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