Goodyear completes sale of Engineered Products
Goodyear Tire & Rubber Co. has completed the previously announced sale of its Engineered Products business. The purchaser, Carlyle Partners IV L.P., paid $1.475 billion for substantially all of the business.
The sale is subject to certain post-closing adjustments.
Four Engineered Products plants will become part of a new entity, EPD Inc., when the sale is finalized. EPD is "an entity sponsored by" Carlyle, according to Goodyear.
Through a long-term license agreement, products will continue to carry the "Goodyear" brand name. The legal name of the company has been changed to Veyance Technologies Inc. Timothy Toppen, formerly president of Goodyear Engineered Products, is the company's CEO.
"The completion of the sale of the Engineered Products business is the
culmination of the Capital Structure Improvement Plan we began in 2003," says Robert Keegan, Goodyear chairman, CEO and president. "This plan has been critical in creating a more competitive balance sheet that will now enable us to execute against our growth strategy by providing reliable access to capital throughout the economic cycle."
Goodyear anticipates net proceeds of approximately $1.4 billion net of
transaction costs, taxes and other agreed-upon payments related to employee buyouts and retirement benefits. It expects to record an after-tax gain on the sale in the third quarter of 2007.
The company says it expects to use the proceeds to:
1. reduce debt,
2. address legacy obligations, and
3. invest in growing its core consumer and commercial tire businesses.
As announced at a recent conference call following its second-quarter financial results, Goodyear's global strategy includes the following:
* investing to increase high value added production capacity by 40% over five years.
* increasing low-cost capacity by 33% in existing plants as part of the strategy to drive low-cost capacity to 50% of its total.
Consistent with these global investment plans, Goodyear has agreed with the United Steelworkers to extend its commitment to invest in high value added capacity in North America beyond the previously announced three-year commitment.
The Engineered Products business operates 32 facilities in 12 countries and has approximately 6,300 associates. It manufactures and markets engineered rubber products for industrial, military, consumer and transportation original equipment end-users.
For more information about Goodyear, visit www.goodyear.com/corporate.