Goodyear Tire, a prominent player in the tire manufacturing industry, has taken a significant step by announcing the sale of its off-the-road tire business to Yokohama Rubber, a leading Japanese tire manufacturer, in a deal valued at $905 million in cash. This strategic move is part of Goodyear's broader effort to enhance profit margins and mitigate debt levels.
The off-the-road tire business caters to diverse global markets, including surface and underground mining, construction, quarries, as well as port and industrial applications. Importantly, Goodyear will continue to uphold its obligations in supplying off-the-road tires specifically for U.S. military and defense uses, thereby retaining a critical segment of its operations. Yokohama Rubber's acquisition includes all shares of Nippon Giant Tire, which manages an off-the-road tire manufacturing plant in Japan, along with Goodyear Earthmover in Australia.
Additionally, the deal encompasses selected off-the-road assets located at various global facilities. According to Yokohama Rubber, Goodyear's off-the-road tire business employs around 500 individuals and generated impressive revenues of $678 million in the fiscal year 2023. This divestiture is part of an overarching strategic review that Goodyear launched in November for its chemicals business, the Dunlop brand, and its off-the-road tire operations as an essential component of a transformative strategy aimed at revitalizing its financial standing.
Previously announced initiatives have the potential to yield over $2 billion in gross proceeds to stabilize the company’s financial footing. During a conference call held on November 15, Goodyear's Chief Financial Officer, Christina Zamarro, indicated that the off-the-road segment necessitated substantial capital investment to achieve competitive scalability, a goal that appears "unlikely" in the near future.
Consequently, Zamarro explained that Goodyear opted to explore opportunities to potentially monetize this particular business unit. The transaction remains contingent upon obtaining regulatory approvals, with an expected completion date set for early next year. Following this sale, Goodyear will continue to manufacture a select range of off-the-road tires for Yokohama over an initial five-year period, as stipulated in a product supply agreement, ensuring continuity in tire quality and service supply during the transition period..