Goodyear Sells Engineered Products Division
After much speculation about the fate of Goodyear’s Engineered Products Division and reports of strong interest from Germany’s Continental AG, news that the division is to be acquired by global private equity firm The Carlyle Group have come as a surprise to many. The company announced the signing of an agreement with Goodyear on March 23 and stated they would pay the tyremaker US$1.475 billion in cash for the Engineered Products Division. This sale price translates to a surprisingly high 9.3x 2006 EBITDA of $158 million, and is considerably higher than the conservative sale price of $750 million recently estimated by Deutsche Bank. The transaction is subject to the usual closing conditions, such as regulatory approvals and finalising a labour agreement with the United Steelworkers union.
The Engineered Products Division employs about 6,500 people worldwide at 32 manufacturing facilities, and annually generates approximately $1.5 billion in sales. Following the sale the division’s headquarters will remain in Akron, Ohio and current management, including president and CEO Timothy R. Toppen, will continue to lead the business.
Carlyle managing director Daniel A. Pryor said, “We are extremely excited about this unique opportunity. Goodyear Engineered Products’ served markets offer many opportunities for growth, both in the U.S. and internationally, and the Company has achieved leading positions under Goodyear’s ownership. We look forward to working with Goodyear Engineered Products’ management and employees, as well as the United Steelworkers, to further build the business off this strong base.”
Goodyear chairman and CEO Robert J. Keegan said, “Engineered Products is a successful business with outstanding associates who have made important contributions to Goodyear. We thank them for these contributions. I’m confident that the resources and business philosophy of Carlyle will support Engineered Products’ growth and continued success going forward.”
Timothy R. Toppen, President of Goodyear Engineered Products, added “The associates of Goodyear Engineered Products and I look forward to working with Carlyle to grow our business as we enter this exciting new chapter in our Company’s history.”