Goodyear Tire & Rubber Co. GT 13.93% agreed to buy Cooper Tire & Rubber Co. CTB 27.00% , a combination the companies said would create a larger firm that could reduce costs and support investments tied in part to the changing landscape for cars and other vehicles.
Goodyear said Monday it will pay about $2.8 billion in cash and stock for its smaller rival, including $41.75 a share in cash for Cooper’s shares, which rose about 24% to $54.11 in morning trading. Goodyear’s shares increased more than 7% to $14.92.
The combined company would generate annual revenue of roughly $17.5 billion and have some 72,000 employees globally, according to an investor presentation. Cooper’s tire brands include its namesake line and Mastercraft.
On a call addressing the proposed deal, executives told investors they aren’t initially looking for cost savings across the merged company’s network of more than 50 plants around the world. Instead, the combined firm would focus on duplicative selling and administrative expenses and finding savings tied to research and development, procurement and logistics.
Within two years of the completion of the deal, cost savings are expected to total $165 million annually, the tire companies said.
The combined company will better be able to invest in “new mobility and fleet solutions,” offering tires and related services to traditional and emerging manufacturers, companies focused on autonomous driving and fleet operators, Goodyear and Cooper said.
After completion of the transaction, expected in the second half of the year, the company will be based in Akron, Ohio, Goodyear’s home office right now, and maintain a presence in Findlay, Ohio, where Cooper is currently based.
Write to Micah Maidenberg at [email protected]
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