Goodyear Tire & Rubber Co. will sell its OTR tire business to Yokohama Rubber Co. Ltd. for $905 million in cash.
The sale comes eight months after Goodyear announced it would seek buyers of three pieces of its business, including the OTR tire operations.
“The sale of the OTR business marks an important milestone as we continue to execute against our Goodyear Forward transformation plan,” says Mark Stewart, CEO and president of Goodyear.
“We are grateful to our OTR colleagues who have driven the success of the business and are committed to working closely with Yokohama to ensure a smooth transition for customers and associates.”
In November, Goodyear said its OTR business produced annual revenue of approximately $700 million. In its announcement of the sale, Yokohama said the Goodyear OTR tire operation, which includes tires for the mining and construction industries, had total sales of $678 million in fiscal 2023 and about 500 employees.
Goodyear says it will continue providing OTR tires for U.S. military and defense applications. As part of a product supply agreement with Yokohama, Goodyear will manufacture certain OTR tires for Yokohama at some of its manufacturing locations for up to five years after closing the transaction.
The deal is subject to regulatory approvals and is expected to close by early-2025.
Yokohama says its acquisition of Goodyear's OTR business will contribute to the ongoing expansion of its off-highway tire business.
Yokohama said globally, the OTR tire market is expected to encompass around four trillion yen and is expected to grow around 6% per year — “considerably higher than the projected 2% annual growth for the consumer tire market.”
Yokohama says it is already “well-positioned” in that global market for agriculture and forestry tires, which it estimates accounts for about 40% of the total off-highway tire market.
“The acquisition will serve to complement Yokohama Rubber’s OHT product range in non-agricultural applications by bringing in the strong brand power of Goodyear’s OTR business into the group,” said Yokohama.
As part of the acquisition, Yokohama will acquire all shares of Nippon Giant Tire Co. Ltd., which operates Goodyear’s OTR tire plant in Japan, and Goodyear Earthmover Pty. Ltd. In Australia, plus “certain OTR assets at the other plants and facilities around the world.”
Though neither company specifically mentioned it in their statements, in the U.S. Goodyear produces OTR tires in Topeka, Kan. (MTD asked Goodyear to clarify plans for the Topeka factory. A spokesman noted the plant also produces commercial tires, and that "the Topeka plant will supply tires to Yokohama for an initial period of up to five years post-closing.")
When Goodyear initially announced its intention to sell off its OTR tire operations, Chief Financial Officer Christina Zamarro said the OTR business was more severable than other assets in the Goodyear portfolio. Former Chairman, CEO and President Rich Kramer also noted that Goodyear’s OTR competitors were much larger and to ramp up to compete at that scale would require “significant” investment, which Zamarro said wouldn’t be achievable in the near future.
Goodyear officials say they plan to use transaction proceeds to “reduce leverage” and “fund initiatives” in connection with the Goodyear Forward plan.
