The Goodyear Tire & Rubber Company (NASDAQ: GT) has disclosed the acquisition of Cooper Tire & Rubber Company (NYSE: CTB). The firms will sign the agreement under which Cooper Tire will be acquired by Goodyear for $2.5 billion. This deal will help Goodyear to grow its product portfolio by integrating the two portfolios of the corresponding brand.
This deal will also establish a strengthened U.S.-based manufacturer with an improved presence throughout the wholesale and retail trade channels while merging both firms’ strengths in the highly lucrative light truck and SUV product segments.
Furthermore, the deal is authorized by the Boards of Directors of both firms. As per the deal, the investors of Cooper will get $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear ordinary stock per Cooper share for a total share capital value of nearly $2.8 billion.
Shareholders of Cooper will receive the cash and stock payment of $54.36 per share based on the last closing stock price of Goodyear on February 19, 2021. This represents the premium of 36% to the 30-day volume-weighted average price of Cooper as of the execution on February 19, 2021. After the execution of the deal, the shareholders of Goodyear will possess nearly 84% of the merged firm and the shareholders of Cooper will have 16% holding in the merged firm.
This deal will offer long-term financial benefits to both firms. Cooper has gained a reputation as the 5th biggest tire producer in North America since it came into existence. This deal will also reinforce the position of the firms in the Global Tire sector. Furthermore, the acquisition of Cooper will expand the scale to support investments in new mobility and fleet solutions.
Goodyear is planning to finance the cash portion of the deal through debt financing and has ensured a loyal bridge financing facility led by JPMorgan Chase Bank, N.A.