Arkansas Best Corp., the former owner of Treadco Inc., has notified Goodyear Tire & Rubber Co. of its intention to sell its 19% ownership in Wingfoot Commercial Tire Systems LLC for a cash price of $71.3 million.
Arkansas Best is using a "put-call" option to shift ownership back to Goodyear, according to David Humphrey, Arkansas Best's director of investor relations.
"We are paying Arkansas Best $71.3 million for their stake," says a Goodyear spokesman.
The transaction gives Goodyear 100% ownership of Wingfoot.
The sell back clause, which Goodyear had expected Arkansas Best to exercise, was written into Goodyear's original agreement with Treadco that resulted in Wingfoot's creation in 2000.
"We were not involved in any way with the daily operations of (Wingfoot)," says Humphrey. "We were a passive investor."
Akransas Best expects to close the transaction and receive related proceeds from Goodyear on or about May 1, 2003.
Goodyear officials say the transaction will be "a positive."
Arkansas Best, which is based in Fort Smith, Ark., says it will record a pre-tax gain of $12 million ($8.4 million after tax) during the second quarter upon completion of the deal.
Wingfoot is the largest retreader in the nation, according to Modern Tire Dealer's Top 100 U.S. Retreaders List, which appears in the March 2003 issue of MTD.
Wingfoot has 59 retread shops and retreads 690 light truck; 6,580 medium truck; and 101 OTR tires per day.
