Goodyear's thoughts on the deal with Titan
The sale of Goodyear Tire & Rubber Co.'s farm tire business to Titan Tire Corp. gives the company more room to maneuver financially, according to Jon Rich, president of Goodyear's North American Tire (NAT) business unit.
According to the agreement, Goodyear will sell its North American farm tire assets, including its manufacturing plant, property and equipment in Freeport, Ill., and inventories. The deal is pending government, regulatory and union approvals.
The sale, which also would include a licensing agreement with Titan to manufacture and sell Goodyear-branded farm tires in North America, is valued at approximately $100 million, says Rich.
The sale is expected to result in a one-time gain. On an on-going basis, the sale would result in a revenue reduction of about $200 million annually, but would improve NAT earnings and eliminate the need for further investment required for the NAT farm business.
"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 tires from a company that considers the farm business as core," says Rich.
"Goodyear tires have been a part of the North American farm for more than 100 years. It was important to us to continue to have Goodyear farm tires as part of the North American farming community."
Titan Tire is a subsidiary of Titan International Inc.