Mon 02/22/2021 11:47 AM
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Relevant Documents:
Announcement
Transaction Presentation

Takeaways

  • The Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. announced today, Monday, Feb. 22, that they have agreed to a cash and stock merger valued at approximately $2.8 billion.

  • The transaction will require regulatory approvals and approval by Cooper shareholders. The companies expect to close in the second half of 2021.

  • On the transaction’s deal call this morning, the companies said they do not anticipate regulatory issues but acknowledged that because the deal involves a number of different geographies, the regulatory process “will take time.”


The Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. announced today, Monday, Feb. 22, that they have agreed to a cash and stock merger valued at approximately $2.8 billion. Continue reading as our M&A team analyzes the announcement of the Goodyear and Cooper merge and Request a Trial for access to the linked documents as well as our analysis and reporting on hundreds of other mergers and acquisitions.

Under the terms of the merger agreement, Cooper shareholders will receive $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper share. According to the announcement, the implied cash and stock consideration is $54.36 per Cooper share, representing a premium of 24% to Cooper's closing stock price on Feb. 19.

Goodyear says that it intends to fund the cash portion of the transaction through debt financing. It has secured a committed bridge financing facility led by JPMorgan.

Cooper designs, manufactures, markets and sells replacement passenger car, light truck, truck and bus radial, motorcycle and racing tires. According to the company, it is the fifth largest tire manufacturer in North America and the 13th largest tire company in the world based on sales. It operates in four segments organized by geography: North America, Latin America, Europe and Asia.

Cooper’s primary market is the United States. In the Americas, Cooper competes with Bridgestone Corp., Goodyear and Groupe Michelin, as well as low-cost producers in Asia, Mexico, South America and Central Europe. Cooper stated in its most recent annual report that the Americas segment had a market share in 2019 of about 10% of passenger car and light truck replacement tire sales in the United States.

Goodyear is one of the world’s largest manufacturers of tires sold to vehicle manufacturers for mounting as original equipment and for replacement. The company also operates about 1,000 retail outlets where it offers sales and services to consumer and commercial customers. The company describes Bridgestone and Michelin as its “major competitors” and Continental, Cooper, Hankook, Kumho, Nexen, Pirelli, Sumitomo, Toyo, Yokohama and various regional tire manufacturers as “significant competitors.”

According to statistics published by trade publication Tire Business, market share for tire sales in North America is (1) Michelin: 19.8%; (2) Bridgestone: 19.5%; (3) Goodyear: 12.8%; (4) Continental: 6.8%; (5) Cooper: 4.8%; (6) Hankook: 3.5%; (7) Toyo: 3.4%; (8) Sumitomo: 2.8%; and (9) Pirelli 2.6%. Other participants account for 21.3%. The market represented in this manner appears fragmented. Certain submarkets, such as sales of replacement tires for passenger cars and light trucks, as defined above by Cooper, may be more concentrated, but a large number of competitors apart from the merging parties operate in this segment. The merging parties' footprints also overlap in Europe and Asia.

The transaction will require regulatory approvals and approval by Cooper shareholders. The companies expect to close in the second half of 2021.

On the transaction’s deal call this morning, the companies said they do not anticipate regulatory issues but acknowledged that because the deal involves a number of different geographies, the regulatory process “will take time.”

Advisors

Lazard is serving as lead financial advisor to Goodyear; JPMorgan is also serving as a financial advisor. Paul Weiss and Covington and Burling are serving as legal advisors to Goodyear.

Goldman Sachs is serving as financial advisor to Cooper, and Jones Day is serving as legal advisor.
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