Sumitomo Rubber Industries Ltd. has entered into a definitive agreement with Goodyear Tire & Rubber Co. to acquire the Dunlop brand for a total of $701 million.
The deal, which includes trademarks and “intangible assets necessary for the operations of the brand business in Europe, North America and Oceania,” according to a statement from Goodyear, is expected to close by the middle of 2025.
SRI’s acquisition of the Dunlop brand also provides for off-take, licensing and “other arrangements.”
According to Goodyear, the acquisition breaks down as follows:
- SRI will pay Goodyear $526 million for the Dunlop brand and “certain associated intellectual property;”
- SRI will pay Goodyear a $105 “transition fee” to support the transition of the Dunlop brand and facilitate the transition of Dunlop brand customers to SRI, including “planning matters and support of distribution and logistics;”
- SRI will buy existing Dunlop brand consumer tire inventory “at an agreed mark-up.
Goodyear will continue to manufacture, sell and distribute Dunlop branded consumer tires in Europe through at least Dec. 31, 2025.
In addition, the Akron, Ohio-based tiremaker 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 agreement between SRI and Goodyear “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,” say Goodyear officials.
Following the completion, 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),” which “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 12 months' notice, subject to payment of a termination fee.”
Goodyear also 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. And Goodyear can terminate this licensing agreement at any time during the licensing period.”
According to Goodyear, Dunlop consumer tire sales totaled $532 million in 2023, while sales of Dunlop-brand commercial truck tire sales totaled $201 million during the same period. Other specialty Dunlop tire sales, excluding motorcycle tires, totaled $22 million. (Goodyear will retain its rights to the Dunlop trademarks for its motorcycle tire businesses in Europe and Oceania.)
"This is another important milestone as we continue to execute against our Goodyear Forward transformation plan,” says Goodyear CEO and President Mark Stewart. “We are optimizing 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,” he continues.
"Our team conducted a comprehensive process focused on maximizing value for Goodyear through a divestment of our Dunlop Brand, and we are very pleased with the outcome achieved," says Christina Zamarro, Goodyear 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."
The transaction is subject to regulatory approvals.
Goodyear intends to use proceeds “to reduce leverage and fund initiatives in connection with the Goodyear Forward transformation plan.”
