The Goodyear Tire & Rubber Co. is selling one of its tire brands, Dunlop, to a Japanese company for $526 million, plus an additional $105 million for the Akron company to help transition the Dunlop brand to its new owner.
Additionally, Sumitomo Rubber Industries will buy Goodyear’s existing Dunlop inventory for a markup, a deal that’s expected to net Goodyear an additional $70 million. All told, the deal — which is part of the Goodyear Forward transformation plan for the company — will bring Goodyear $701 million in cash.
Goodyear announced Tuesday night that it had signed a definitive agreement to sell the brand and its trademarks, as well as some intellectual property, to the company that’s known as SRI. Dunlop has been part of Goodyear’s portfolio since 1999 as part of a joint venture with SRI. The Dunlop brand dates back to the 19th century.
The sale follows Goodyear’s July announcement that it was selling its off-the-road tire business to the Yokohama Rubber Co. for $905 million. That deal is expected to close early this year; the Dunlop sale is expected to close in the middle of the year, if approved by regulators. The Dunlop deal can be terminated if it hasn’t closed by Oct. 7.
The sale is an “important milestone” as the company works to optimize its portfolio, Goodyear president and CEO Mark Stewart said in a statement.
“Not only does the transaction deliver significant value for our shareholders, it better positions Goodyear to enhance our focus on the growth of our core brands,” Stewart said.
Goodyear’s executive vice president and chief financial officer, Christina Zamarro, said in the statement that the company was “very pleased” with the sale, which came after a review that was focused on maximizing value for the company by divesting it of Dunlop.
Goodyear will keep selling Dunlop tires in Europe
Although Goodyear is selling the Dunlop brand, it doesn’t mean the company will immediately cease to be associated with it. For at least the remainder of the year — and possibly longer — Goodyear will still make, sell and distribute Dunlop tires for consumer vehicles in Europe.
While it does that, it will pay SRI an undisclosed royalty fee, but will keep the profits from the sales. The agreement will renew until the end of 2026, unless both Goodyear and SRI decide to end it earlier.
The deal for Goodyear to continue to sell Dunlop tires in Europe is meant to give SRI time to increase its presence in Europe so it can maintain existing service levels for Dunlop customers.
Additionally, Goodyear will continue to supply SRI with some Dunlop tires for five years. Over that period, SRI will buy at least 4.5 million tires a year, per the agreement. SRI can end the deal early, after the third year, with 12 months’ notice and the payment of an undisclosed termination fee. The agreement also gives Goodyear a markup on each tire sold, including on the cost of raw materials.
And Goodyear intends to license the Dunlop brand from SRI to sell commercial truck tires in Europe for the long term. It will pay a royalty on those sales and Goodyear has the option to terminate the agreement at any time.
Goodyear will also keep the rights to Dunlop’s brand to sell its motorcycle tires in Europe and the region of Oceania, which includes Australia and New Zealand.
In 2023, Dunlop’s consumer tire sales totaled $532 million, while its commercial tire sales were $201 million. Other specialty Dunlop tire sales, excluding motorcycle tires, were $22 million in 2023.
The sale will reduce Goodyear’s operating income by about $65 million a year for the five-year transition period when Goodyear will continue to make Dunlop tires for sale in Europe, the company said. But that estimate doesn’t account for the benefits of having the additional cash on hand from the Dunlop sale, or anything else Goodyear might do to improve its financial outlook.
Goodyear has about 71,000 employees worldwide. A spokesperson for the company did not immediately respond to a request for comment about how the sale would affect employees at its Akron headquarters, including whether anyone would lose their jobs as a result of the sale.