The road ahead for Goodyear and Cooper Tire
Overall, “this is a big North American play to lever up the business in the strongest profit market and then drive some cost synergies throughout that region,” according to the specialist.
Among the areas of focus, the Interview considered business rationalisation, with it being noted that Goodyear has too many (five) brands. “Certainly some brand decisions are going to have to be made by Goodyear, and in the US at least, some rationalisation.” For example, they believe the Dunlop brand in the US market is the “odd man out”.
Since the deal strengthens Goodyear’s presence in North America, the specialist was asked the extent to which they think it will give Michelin and Bridgestone grounds for concern. We heard that these two players are more “globally balanced” than Goodyear and that, ultimately, they probably won’t feel threatened.
Manufacturing synergies were also on the agenda. Cooper’s low-cost global footprint was highlighted as a boon, with facilities in Serbia, Mexico and Kunshan in China highlighted as high-potential growth areas. Additionally, Cooper has almost double the amount of light-truck capacity that Goodyear does.
The expert was also asked whether any post-pandemic new normals are expected, with it being noted that the value-focused market has been growing faster than usual. Whether this will continue remains to be seen.
The potential for further industry consolidation was also raised. Consolidation is “absolutely” going to continue to happen at the manufacturing level, we heard. Meanwhile, on the distribution side, “I continue to see the big get bigger. There’s private equity money out there.”
The Interview ended with the expert outlining their views on the best- and worst-case scenarios for the combined entity over the next two to three years.
To access all the human insights in Third Bridge Forum’s Goodyear to acquire Cooper Tire – deal synergies & post-pandemic outlook Interview, click here to access the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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