Goodyear was almost destroyed 27 years ago

Bob Ulrich
Posted on November 20, 2013

Twenty-seven years ago in November, the largest tire manufacturer in the United States almost went under. British billionaire Sir James Goldsmith was about to buy Goodyear Tire & Rubber Co.

And the speculation was that, like he had done with other companies, he would break it up, similar to what Gordon Gekko did to companies in the 1987 film, "Wall Street."

But on this day in 1986, Nov. 20, Goodyear officially bought out the corporate raider's stake in the company for nearly $619 million. In order to prevent another takeover attempt in the future, it coughed up an additional $2 billion for 40 million more outstanding shares.

So Goodyear shelled out $2.6 billion in "greenmail" to save itself. In today's dollars, that amount would be worth at least twice that. To put the debt in perspective, Apollo Tyres Ltd. recently offered to buy Cooper Tire & Rubber Co. for $2.5 billion.

The cost to the company was much greater, however. Ironically, it ended up breaking itself up by selling off a number of its subsidiaries, including its Celeron oil and gas exploration operation and Goodyear Aerospace unit. It closed two tire manufacturing plants in North America. It laid off more than 3,000 workers.

Over time, more business units were sold off, more plants were closed and more workers were let go. Were any of these moves the result of the financial hole in which Goodyear found itself because of Goldsmith's takeover attempt? Probably.

Dealer reaction to the takeover bid at the time was mostly, but not totally, negative. Speaking to Modern Tire Dealer, one independent said he was "kind of tickled" by the attempt. Why? "It really got them off their butts, didn't it? I can't see where this will really affect tire dealers though. The only thing I'm concerned with is Goodyear's withdrawel from Formula One racing, That will hurt."

Here's an interesting viewpoint from the time. More than 120 dealer "friends" of Goodyear Tire & Rubber Co. paid for a full-page ad in the Wall Street Journal on Nov. 18, 1986. "Numerous foreigners may be financially able to take over the Goodyear Tire & Rubber Co., but will the Goodyear spirit remain unchanged? We think not," wrote the authors.

"After Goodyear, what? The influx of yet more foreign raiders? The 'takeover' of American industry? Vested interests by questionable foreign individuals? Where will it stop?"

The Goodyear dealers on the list had one final word for Goldsmith: "We worked long and hard to build our successful businesses in partnership with the Goodyear management. You may buy this great company -- but you will never buy our loyalty!"

It should be noted that corporate raiders buying companies and selling off their profitable parts is not the same as, using our industry as an example, a foreign manufacturer buying a U.S. company as it grows globally. The agendas are not the same.

Regardless of how you stand on global expansion, the fortunes of Goodyear changed 27 years ago.

To read an excellent summation of the details surrounding the event, click on this 2011 article, "25 years ago: driving back the raider at the gates of Goodyear Tire & Rubber Co." by Cleveland Plain Dealer guest writer and former Akron Beacon Journal editor Stuart Warner.

Related Topics: acquisitions, Formula One, Sir James Goldsmith, Wall Street Journal

Bob Ulrich Editor
Comments ( 0 )
More Stories
VIP Tires & Service President and CEO Tim Winkeler (center) cuts the ribbon at the re-opening of the company’s newly renovated store in Brunswick, Maine. He’s joined by Chairman of the Board, John Quirk (right), and the entire Brunswick auto store team. 
News

VIP Tires & Service Renovates Brunswick Store

A 5,000-square-foot expansion to the VIP Tires & Service store in Brunswick, Maine, added four service bays, new shop equipment; inside storage for up to 2,000 tires and an improved and larger customer area.

Article

Local Economy at a Glance

With a market area that flows along much of the East Coast, there are several regional economies driving McCarthy Tire Service Co. Inc.’s business.

He’s been a janitor and gas pump attendant. He’s installed passenger tires and sold to commercial accounts. He’s worked in the warehouse and car wash. “Every job we had in this place, I did.” Since 1997 John McCarthy Jr.’s job has been president of McCarthy Tire Service, and in 2019 he’s added a new title: Tire Dealer of the Year. (Photo by Michael Touey, Halibut Blue LLC)
Article

Meet the Dealmaker: John McCarthy Jr.

Acquisitions have fueled much of the growth at McCarthy Tire Service Co. Inc. But the strategy and drive come from the company's president, John McCarthy Jr. He's our 2019 Tire Dealer of the Year.

After 100 years in business, Max Finkelstein is still growing, and has opened its 16th distribution center near Pittsburgh to serve customers in three states.
News

Max Finkelstein Extends Market Area Westward

Max Finkelstein Inc. is expanding its footprint to the west with the opening of a new distribution center near Pittsburgh, Pa. It's already serving customers in Western Pennsylvania, West Virginia and Ohio.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!