Goodyear will become 100-percent owner of Wingfoot Commercial Tire Systems L.L.C. by May 1, at a cost of $71.3 million, according to terms of its joint venture agreement with transportation holding company Arkansas Best Corp.
Fort Smith-based Arkansas Best notified Goodyear March 20 it was exercising its ``put'' option regarding their venture. That means Goodyear is obligated to buy Arkansas Best's 19-percent share in Wingfoot for the previously agreed-upon price of $71.3 million by April 30 at the latest.
Goodyear and Arkansas Best set up Wingfoot Commercial Tire in September 2000 by combining Arkansas Best's Treadco Inc. unit with Goodyear's commercial tire distribution network. Wingfoot operates 171 commercial tire centers and 61 retread plants, generating an estimated $675 million in sales.
According to the terms of the agreement, Arkansas Best has the right to sell its ownership stake in Wingfoot to Goodyear at any time after April 30, 2003, and before April 30, 2004. The put price is the sale price agreed to by the two parties.
Arkansas Best said it expects to record a pre-tax gain of approximately $12 million in the second quarter, following completion of the deal. Arkansas Best expects to use the proceeds to reduce the outstanding debt under its credit agreement. The company operates two principal units, ABF Freight System Inc., a nationally active less-than-truckload general commodities trucking company, and Clipper, an intermodal marketing company.