AKRON — Goodyear has agreed to sell the North American and European rights to the venerable Dunlop tire brand — which has roots dating back more than 130 years — to Sumitomo Rubber Industries Ltd. (SRI) for approximately $701 million in cash.
Goodyear has controlled the Dunlop brand in North America and Europe since 1999 as part of a global alliance with SRI, and retained those rights in 2015 when the companies dissolved their alliance.
The sale includes trademarks and "intangible assets necessary for operations" of the Dunlop business in Europe, North America and certain markets in Oceania for consumer, commercial and other specialty tires.
SRI, which already controls the Dunlop brand in most other regions across the globe, said it “aims to establish [Dunlop] as a premium tire brand in the global market. By leveraging our rich heritage and strong brand recognition, we will set ourselves apart from competitors through innovative products that integrate cutting-edge technologies in addition to meeting the evolving needs of the next-generation mobility society.”
Once the deal closes, SRI will pay Goodyear $526 million for the Dunlop brand and certain associated intellectual property and another $105 million in a transition fee for support "in transitioning the brand and associated intellectual property, and facilitating the transition of Dunlop customers, to SRI, including planning matters and support of distribution and logistics."
In addition, SRI will purchase existing Dunlop consumer tire product "at an agreed markup." Goodyear said the exact inventory value to be sold will finalized between signing and closing, but the company said it estimates proceeds to be $70 million.
Goodyear estimates the value of Dunlop-brand products it sells at more than $750 million annually.
Under terms of a transition off-take agreement (TOA), Goodyear will supply certain Dunlop-branded tires to SRI in Europe for five years. The agreement stipulates minimum purchase quantities of 4.5 million tires per year for the term, on a take-or-pay basis.
SRI may end the TOA after the third year, with 12 months' notice, subject to termination fee. The TOA provides Goodyear with an agreed markup to total costs (including raw materials) for each tire sold.
The sale fulfills another aspect of the Goodyear Forward plan, which focuses on streamlining operations and finding cost efficiencies in order to make the tire maker more profitable.
Goodyear CEO and President Mark Stewart called the sale "another important milestone" in the implementation of the plan.
Goodyear agreed last July to sell its off-the-road (OTR) tire business unit to Yokohama Rubber Co. Ltd. as part of the Goodyear Forward strategy, which also calls for divesting the firm's chemicals businesses.
"We are optimizing our portfolio and reducing leverage to drive sustainable and substantial shareholder value creation," Stewart said "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."
Under the terms of a Transition License Agreement (TLA), Goodyear will continue to manufacture, sell and distribute Dunlop consumer tires in Europe through at least Dec. 31, 2025, with the Akron-based tire maker paying a royalty to SRI during this period on Dunlop sales. Goodyear will retain all profit from those sales.
This agreement automatically will extend through Dec. 31, 2026, unless Goodyear and SRI agree to an earlier termination.
Goodyear said the transition period was intended to provide SRI more time to scale its organization in Europe in order to absorb the Dunlop brand and maintain service for existing Dunlop customers.
Goodyear said it 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 agreement at any time during the licensing period.
According to Goodyear, Dunlop consumer tire sales were $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 will retain Dunlop trademark rights for four-wheel tires in India, Malaysia, Singapore and Brunei; and for motorcycle tires in India, Europe and Oceania, according to SRI.
Earlier last year, Goodyear repositioned the Dunlop brand as its “pan-European” value brand, positioned between the premium Goodyear and five “local hero brands,” which Stewart called the upper part of Tier 2. In North America the brand has shrunk to under a 1% market share.
At the SEMA Show last November, Stewart told Tire Business that the company would not sell the Dunlop brand in a "bargain fire sale." Stewart revealed that his father had worked at Dunlop Tire Corp. and Dunlop Holdings or 42 years.
"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," Christina Zamarro, executive vice president and chief financial officer, said.
"We are committed to working closely with SRI to ensure a smooth transition for customers of the Dunlop brand."
The transaction, subject to regulatory approvals, other customary closing conditions and consultations, is expected to close by mid-2025. Goodyear said it will use proceeds of the sale to reduce leverage and fund initiatives in connection with the Goodyear Forward transformation plan.
Goodyear said it does not expect the transaction "to materially impact segment operating income through the term of the TOA. After that, Goodyear said it expects to reduce segment operating income by approximately $65 million per year during the term of the TOA, before any other actions it may take to improve operating margin.
For its part, SRI — which developed the Falken brand over the past decade as its primary brand in Europe and North America — said it intends to position Dunlop as its “core brand” and advance its “brand-strengthening activities as a joint effort between our tire and sports businesses.
“By accelerating brand investment in motorsports and global marketing activities in tennis, we will increase the value of the Dunlop brand around the world and develop it into the brand of choice for customers.”
SRI said it intends to continue developing the Falken brand “by utilizing the product planning and marketing capabilities we have cultivated in each region to focus on bold, one-of-a-kind products that appeal to its core fan base.
“Through a dual-brand approach to business development, we aim to increase sales volume in each region and raise the proportion of premium products.”
SRI President and CEO Satoru Yamamoto noted: “Going forward, we will maximize the potential of the Dunlop brand, not only in the new regions where we have acquired rights, but also in existing regions, and further accelerate our efforts to realize our purpose: ‘Through innovation we will create a future of joy and well-being for all.’”
Goldman Sachs & Co. L.L.C.. is acting as lead financial adviser, while Barclays Capital Inc. is acting as financial adviser and Cleary Gottlieb Steen & Hamilton LLP is acting as legal adviser to Goodyear.
