Goodyear has sold the Dunlop brand to the Japanese tyre brand Sumitomo, for a reported deal of USD701 million (MYR3.1 billion).
The entire deal is a little convoluted, as Sumitomo already owns the Dunlop brand since 1985 to produce Dunlop tyres under license for certain markets. However, Sumitomo did not buy the entire company. Then, in 2015, Sumitomo reacquired Dunlop’s entire motorcycle tire division from Goodyear.
The latest deal sees Sumitomo buying the entire Dunlop brand (including the car tyres) and their manufacturing facilities. The deal is part of Goodyear’s plan to streamline its operations, which it laid out in its ‘Goodyear Forward’ transformation plan. The plan has seen the closure of several factories around the world including in Malaysia, recently.
As well as the purchase price paid to acquire the brand, Sumitomo will also pay a “Transition Fee” and while it sounds like a lock, stock, and barrel purchase, in Europe at least, Dunlop will continue to manufacture, sell and distribute Dunlop branded consumer tyres until at least December 31, 2025. Furthermore, Dunlop will still supply certain branded tyres to Sumitomo for the European market for a five-year period, with quantities of 4.5 million tyres per year required to oblige the contract.
Speaking about the deal, Mark Stewart, Goodyear Chief Executive Officer and President, said: “This is another important milestone as we continue to execute against our Goodyear Forward transformation plan. We are optimising our portfolio and reducing leverage to drive sustainable and substantial shareholder value creation … Not only does the transaction deliver significant value for our shareholders, it better positions Goodyear to enhance our focus on the growth of our core brands.”
“Our team conducted a comprehensive process focused on maximising value for Goodyear through a divestment of our Dunlop Brand, and we are very pleased with the outcome achieved,” said Christina Zamarro, Executive Vice President and Chief Financial Officer. “We are committed to working closely with SRI to ensure a smooth transition for customers of the Dunlop Brand.“
