Detore: Early observations of industry mega deal

Our headline across the top of the front page for our March 1 print edition reads: "Goodyear to buy Cooper."

There is as much to unpack from those four little words as there is in any magician's suitcase.

The next six months should get interesting, as the proposed $2.5 billion megadeal winds through federal regulators and the integration process cranks up.

Let's take a look at a few of some of the more fascinating observations and questions to emerge.

First of all, the news itself seemed to shock most of the industry. No source that we have talked with — at least not any directly involved with negotiations — had any inkling of what was to come.

In fact, Cooper Tire & Rubber CEO and President Bradley Hughes told his employees that the "news comes as a surprise, particularly given the strong momentum we've been driving in our business."

How could that happen in a tight-knit industry such as ours? Why didn't word leak to dealers, competitors or other stakeholders?

One more word: Pandemic.

With many employees still working remotely, at least for a part of the week, it stands to reason that water-cooler chatter has subsided considerably. It's more difficult today for one employee to see something, hear something or even pick up on something when he or she is working from a home office.

In addition, the lack of travel — and more specifically, fewer opportunities for dealer networking (and rumor-mongering) no doubt played a role.

And finally, negotiators at both companies were tight-lipped, a trait our legislators in Washington should emulate.

Another lingering question involves distribution.

What will this mean for TireHub L.L.C., the wholesaler owned jointly by Goodyear and Bridgestone Americas? Richard Kramer, CEO and president of Goodyear, told investors that the company plans to leverage TireHub and its aligned third-party distribution network to include the Cooper brand portfolio.

How does this impact other wholesalers, such as American Tire Distributors Inc. (ATD) and National Tire Wholesalers (NTW), which distribute Cooper tires?

Another question: What does this mean for the future of U.S. tire manufacturing?

The deal combines the only two U.S.-based tire manufacturers, which are among the top 20 globally. The only other significant U.S. tire makers are Quincy, Ill.-based Titan International Inc. and Jackson, Tenn.-based Carlstar Group, ranked 25th and 48th, respectively, among global tire companies.

An optimist might argue that if a U.S. tire maker was going to be acquired, it is good news that another U.S. tire maker was the buyer, as opposed to a foreign-based company.

But a pessimist might counter this leaves the industry with just a few broad-based U.S. tire makers among the world's leading companies.

And finally, this will be the question on most dealers' minds: How does Goodyear plan to execute a multi-tier product and pricing strategy?

There appears to be ample opportunities for growth, particularly with the Mastercraft and Mickey Thompson brands.

Could Goodyear successfully leverage the new portfolio and expanded capacity to close the gap further on Group Michelin and Bridgestone Corp., the top two tire makers, respectively, in terms of global sales?

Stay tuned. There's so much more to unpack in the future.