The Goodyear Tire & Rubber Company has signed a definitive agreement to sell the Dunlop brand, comprising trademarks and intangible assets necessary for operations of the brand business in Europe, North America, and Oceania for consumer, commercial, and other specialty tires together with certain associated intellectual property to Sumitomo Rubber Industries.
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.
The sale of the Dunlop brand follows a previously announced strategic review of the brand in connection with the company's Goodyear Forward transformation plan. Pursuant to the transaction terms, SRI 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 SRI, and the purchase of Dunlop tire inventory. The transaction also provides for additional ongoing offtake, licensing, and other arrangements.
"This is another important milestone as we continue to execute against our Goodyear Forward transformation plan. We are optimizing our portfolio and reducing leverage to drive sustainable and substantial shareholder value creation," said Mark Stewart, Goodyear CEO and president. "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."
Christina Zamarro, executive vice president and chief financial officer, said the Goodyear team conducted a comprehensive process focused on maximizing value for Goodyear through a divestment of the Dunlop Brand.
“We are very pleased with the outcome achieved," Zamarro said. "We are committed to working closely with SRI to ensure a smooth transition for customers of the Dunlop Brand."
The transaction is subject to regulatory approvals, other customary closing conditions and consultations and 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.
Terms of the Dunlop Brand Transaction
Goodyear will receive approximately $701 million of cash proceeds at closing from SRI, across three transaction components:
SRI will pay Goodyear $526 million for the Dunlop brand and certain associated intellectual property;
SRI will pay Goodyear a $105 million Transition Fee for support in transitioning the Dunlop brand and associated intellectual property, and facilitating the transition of Dunlop customers, to SRI, including planning matters and support of distribution and logistics through the end of the Transition Offtake Agreement
SRI will purchase existing Dunlop consumer tire inventory at an agreed markup. The exact inventory value to be purchased will finalized between signing and closing. However, Goodyear estimates proceeds to be approximately $70 million, subject to a true-up.
Selling Dunlop Tires in Europe Through 2025
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 Dec. 31, 2025.
Goodyear will pay a royalty to SRI during this period on Dunlop sales but will otherwise retain all profits from these sales. The term of the TLA will automatically extend for an additional year, through Dec. 31, 2026, unless the parties mutually agree to an earlier termination. This transition period is intended to give SRI time to scale its organization in Europe to effectively absorb the Dunlop Brand and maintain service levels for existing Dunlop customers.
Goodyear Supplying Tires for 5 Years
Following the completion of the TLA, Goodyear will supply certain Dunlop-branded tires to SRI 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. The TOA provides Goodyear with an agreed markup to total costs (including raw materials) for each tire sold.
Licensing Dunlop Truck Tires in Europe
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.
