Analyst Bret Jordan of Jefferies L.L.C. pointed to the favorable stock-market reaction, where shares of both companies rose on news of the deal, as proof that Wall Street likes the purchase.
Neither Mr. Jordan nor Mr. Picariello said they expect any antitrust issues emerging with the transaction. With Cooper mostly in the replacement market, there's no concern on the original equipment side of the business, and combining the companies' replacement business will put its share of that market at close to 20%, maybe a bit more, of the total. That's in line with existing competitors.
Pushing Cooper-brand tires through TireHub, the joint-venture wholesale distribution business Goodyear owns with Bridgestone Americas Inc., will help the economics of that portion of the business as well, Mr. Jordan said.
"Having some more product to put through that fixed overhead is probably not a bad thing," he said about the TireHub business.
Along with distribution savings, Mr. Jordan also sees supply chain improvements as well as a cut in corporate costs through the elimination of duplicate positions once the two organizations combine.
Goodyear has identified $165 million in "run-rate" cost savings within two years of the deal closing. The majority of that cash will come from eliminating or reducing corporate functions and gaining operating efficiencies, Goodyear said.
"I would expect a fair amount of corporate overhead reduction, likely on the Cooper side," Mr. Jordan said.
Another important aspect of the deal is $450 million in tax credits Goodyear already is sitting on and will be able to use when the deal closes. This added tax benefit, which other potential buyers do not have in their hip pocket, puts Goodyear into a stronger buying position, the analysts said.
While restricting as one company comes with its own set of costs, Goodyear said the deal will be immediately accretive. That's Wall Street's way of saying the larger company will be more profitable from the get-go. It also slightly improves Goodyear's balance sheet.