Goodyear/Titan Rumours Turn Out to Be True
The Goodyear Tire & Rubber Company has announced that it has reached an agreement with Titan Tire Corporation to sell its North American agricultural tyre assets. The sale, valued by Goodyear at $100 million, will include the company’s manufacturing plant, property and equipment in Freeport, Illinois as well as a licensing deal. This part of the agreement would see Titan produce Goodyear branded agricultural products in North America. Goodyear reports that the sale will result in a revenue reduction of about $200 million per year.
Goodyear’s announcement comes after the story was exclusively reported on the Tyres & Accessories website in January, only to be dismissed as “rumours” and “speculation” by other publications. The reverberations of the T&A report were felt as far away as the US where The Detroit News, leading tyre trade publications and investment news services all carried the story. One Merrill Lynch analyst even calculated what Goodyear’s financial position would be after the sale, based on the T&A report.
Tire Review has reported one possible hitch to the deal – the USWA. According to the US trade magazine, the USWA has a less-than-positive history with Titan. In addition, Goodyear’s current labour agreement, which covers the Freeport plant, requires that before Goodyear can sell a union-covered plant, the USWA must negotiate a new agreement with the prospective owner. There was no immediate word if negotiations had started, or the status of any such talks.
“We are honoured that Goodyear chose Titan to facilitate the growth of the Goodyear brand for farm tyres in North America. Combining Titan’s focused engineering expertise in addressing the needs of the farming community with the power of the Goodyear name creates an undeniable advantage for the American farmer,” stated Maurice Taylor Jnr, Titan president and CEO.
“This agreement is important in that it allows Goodyear to sell a non-core asset in a business that has been challenging to our earnings, yet allows continued access to the same high-quality Goodyear-branded tyres from a company that considers the farm business as core,” commented Jon Rich, president of Goodyear North American Tire.