Goodyear Tire To Sell Dunlop Brand To Sumitomo Rubber Industries For About $701 Mln

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(RTTNews) - Goodyear Tire & Rubber Company (GT) announced that it has agreed to sell the Dunlop brand to Sumitomo Rubber Industries, Ltd. The sale includes trademarks and intangible assets necessary for the operations of the brand business in Europe, North America, and Oceania, covering consumer, commercial, and other specialty tires, along with certain associated intellectual property.

As per the deal, Sumitomo Rubber Industries will pay Goodyear cash proceeds at closing of approximately $701 million for the transfer of the Dunlop Brand across the relevant geographies, a "Transition Fee" for support in transitioning the Dunlop Brand to Sumitomo Rubber Industries, and the purchase of Dunlop tire inventory. The transaction also provides for additional ongoing offtake, licensing and other arrangements.

The transaction is expected to close by mid-2025. Goodyear intends to use transaction proceeds to reduce leverage and fund initiatives in connection with the Goodyear Forward transformation plan.

In addition, under the terms of a Transition License Agreement, Goodyear will continue to manufacture, sell and distribute Dunlop branded consumer tires in Europe through at least December 31, 2025. Goodyear will pay a royalty to Sumitomo Rubber Industries during this period on Dunlop sales but will otherwise retain all profits from these sales. The term of the transition license agreement will automatically extend for an additional year, through December 31, 2026, unless the parties mutually agree to an earlier termination.

Following the completion of the Transition License Agreement, Goodyear will supply certain Dunlop branded tires to Sumitomo Rubber Industries in Europe for a five-year period under the terms of a Transition Offtake Agreement ("TOA"). The TOA stipulates minimum purchase quantities of 4.5 million tires per year for the five-year term, on a take-or-pay basis. SRI may terminate the TOA early after the third year, with twelve months' notice, subject to payment of a termination fee.

Goodyear will license back the Dunlop trademarks from SRI for commercial (truck) tires in Europe on a long-term basis, subject to a royalty on sales. Goodyear can terminate this licensing agreement at any time during the licensing period.

Dunlop consumer tire sales totaled $532 million in 2023. Dunlop commercial tire sales totaled $201 million in the same period. Other specialty Dunlop tire sales (excluding motorcycle) totaled $22 million.

Goodyear noted that it will retain its rights to the Dunlop trademarks for its motorcycle tire businesses in Europe and Oceania.