QUINCY, Ill. (Feb. 28, 2005) — Titan International Inc. has agreed to buy Goodyear's North American farm tire business for about $100 million.
Titan's Titan Tire Corp. subsidiary said it will buy the assets—including the Freeport, Ill., plant, property and equipment plus inventories—of Goodyear's agricultural tire business. The deal also includes a licensing agreement for Titan to manufacture and sell Goodyear-branded farm tires.
The deal is pending government approval and Quincy-based Titan's ability to reach an agreement with the United Steelworkers of America membership at Goodyear's Freeport plant. Titan said its current senior lenders have agreed to fund the transaction, and Titan plans to raise $125 million in long-term debt or complete another convertible bond offer to reduce the senior debt. The acquisition will add about $210 million in revenue to Titan's overall sales.
Goodyear said that while the deal would lower its revenue by about $200 million annually, it also would improve its North American Tire (NAT) unit's earnings and eliminate the need for further investments in the farm tire business.
“This agreement is important in that it allows Goodyear to sell a non-core asset in a business that has been challenging to our earnings, yet allows continued access to the same high-quality Goodyear-branded tires from a company that considers the farm business as core,” said Jon Rich, president of NAT.
With the agreement, Titan will offer two farm brands—Titan and Goodyear—with the latter positioned as the premium brand. Titan will decide by June whether the combined tire group will be headquartered in Des Moines, Iowa, or Freeport.
“Combining Titan's focused engineering expertise in addressing the needs of the farming community with the power of the Goodyear name creates an undeniable advantage for the American farmer,” said Maurice Taylor Jr., Titan president and CEO. “Also, the linking of the Goodyear and Titan brands will provide dealers and customers with the largest selection of farm tires manufactured by any company in North America. This transaction complements Titan's leading position in off-highway steel wheels.”
Goodyear´s international farm tire assets are not affected.
Titan International, a holding company, owns subsidiaries that supply wheels, tires and assemblies for off-highway equipment used in agricultural, earthmoving/construction and consumer vehicle applications, including all-terrain vehicles and trailers.