Goodyear sells Dunlop brand to Sumitomo Rubber Industries for $700M

The Goodyear Tire & Rubber Company announced that it has agreed to sell the Dunlop brand to Sumitomo Rubber Industries, Ltd. (SRI). SRI owns Falken Tires and has added another storied tire brand to its portfolio.

The sale of the Dunlop brand follows a previously announced strategic review of the brand in connection with Goodyear’s transformation plan. Under the transaction terms, SRI will pay Goodyear cash proceeds at closing of approximately $701 million for the transfer of the Dunlop brand across the relevant geographies, a “Transition Fee” for support in transitioning the Dunlop brand to SRI, and the purchase of Dunlop tire inventory. The transaction also provides for additional ongoing offtake, licensing and other special arrangements.

“This is another important milestone as we continue to execute our Goodyear Forward transformation plan. We are optimizing our portfolio and reducing leverage to drive sustainable and substantial shareholder value creation,” comments Mark Stewart, Goodyear’s chief executive officer and president. “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.”

The transaction is subject to regulatory approvals, other customary closing conditions and consultations, and is expected to close by mid-2025. Goodyear intends to use transaction proceeds to reduce leverage and fund its future initiatives.

Transaction Terms

Goodyear will receive approximately $701 million of cash proceeds at closing from SRI, across three transaction components:

• SRI will pay Goodyear $526 million for the Dunlop Brand and certain associated intellectual property;
• SRI will pay Goodyear a $105 million Transition Fee for support in transitioning the Dunlop Brand and associated intellectual property and facilitating the transition of Dunlop customers to SRI, including planning matters and support of distribution and logistics through the end of the Transition Offtake Agreement; and
• SRI will purchase existing Dunlop consumer tire inventory at an agreed markup. The exact inventory value to be purchased will finalized between signing and closing, however Goodyear estimates proceeds to be approximately $70 million, subject to a true-up.

Additionally, under the terms of a Transition License Agreement (TLA), Goodyear will continue to manufacture, sell, and distribute Dunlop-branded consumer tires in Europe through at least December 31, 2025 (subject to extension).

Goodyear will pay a royalty to SRI during this period on Dunlop sales but will otherwise retain all profits from these sales. The term of the TLA will automatically extend for an additional year, through December 31, 2026, unless the parties mutually agree to an earlier termination.

This transition period is intended to give SRI time to scale its organization in Europe to effectively absorb the Dunlop brand and maintain service levels for existing Dunlop customers.

Following the completion of the TLA, Goodyear will supply certain Dunlop-branded tires to SRI in Europe for five years under the terms of a Transition Offtake Agreement (TOA). The TOA stipulates minimum purchase quantities of 4.5 million tires per year for the five-year term on a take-or-pay basis.

Dunlop consumer tire sales totaled $532 million in 2023. Dunlop commercial tire sales totaled $201 million in the same period. Other specialty Dunlop tire sales (excluding motorcycles) totaled $22 million.

Goodyear will retain its rights to the Dunlop trademarks for its motorcycle tire businesses in Europe and Oceania.