The sale of the Dunlop brand is a part of Goodyear‘s “Goodyear Forward” transformation plan, which focuses on debt reduction.
Goodyear Will Retain Its Rights to the Dunlop Trademarks for Its Motorcycle Tyre Businesses in Europe and Oceania
The Goodyear Tire & Rubber Company (Goodyear) announced on January 7th, 2024 that it has officially sold the Dunlop brand to Sumitomo Rubber Industries for $701 million. The sale includes trademarks and necessary intangible assets for operations in Europe, North America, and Oceania for consumer, commercial, and other speciality tyres, along with associated intellectual property.
The sale of the Dunlop brand, according to Goodyear‘s official statement, is a part of the “Goodyear Forward” transformation plan which focuses on portfolio optimisation and debt reduction.
“This is another important milestone as we continue to execute our Goodyear Forward transformation plan. We are optimising our portfolio and reducing leverage to drive sustainable and substantial shareholder value creation,” said 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,” he added.
Under the agreement, Sumitomo Rubber will pay $526 million for the Dunlop brand and intellectual property, $105 million as a transition fee for Goodyear’s support in transferring operations and customers, and approximately $70 million for existing Dunlop tyre inventory. The transaction also includes long-term licensing and offtake agreements to facilitate the brand transition.
“Our team conducted a comprehensive process focused on maximising value for Goodyear through a divestment of our Dunlop brand, and we are very pleased with the outcome achieved. We are committed to working closely with SRI to ensure a smooth transition for customers of the Dunlop brand,” said Christina Zamarro, Executive Vice President and Chief Financial Officer at Goodyear.
The transaction will begin under the Transition Licensing Agreement (TLA), under which Goodyear will continue manufacturing, selling, and distributing Dunlop consumer tyres in Europe through 31 December 2025, with the option to extend through 2026. Goodyear will retain profits from these sales while paying royalties to Sumitomo Rubber.
After that, the agreement will shift to a Transition Offtake Agreement (TOA). During this period, Goodyear will supply Dunlop tyres to Sumitomo Rubber for a minimum of 4.5 million units annually over five years. Early termination after three years is possible, subject to notice and a termination fee.
Sumitomo will then purchase existing Dunlop consumer tyre inventory at an agreed markup. The exact inventory value will be finalized between signing and closing. However, Goodyear estimates proceeds to be approximately $70 million, subject to a true-up.
In addition, Goodyear will retain its rights to the Dunlop trademarks for its motorcycle tyre businesses in Europe and Oceania. Goodyear will also license back the Dunlop trademarks from Sumitomo Rubber for commercial truck tyres in Europe on a long-term basis.
The transaction, pending regulatory approvals and customary closing conditions, is expected to be finalised by mid-2025. Goodyear plans to use the proceeds to reduce debt and fund initiatives tied to its transformation strategy.
Dunlop consumer tyre sales reached $532 million in 2023, with commercial and speciality tyre sales contributing $201 million and $22 million, respectively. While the sale is not anticipated to significantly affect Goodyear’s operating income during the TLA term, the company projects an annual reduction of $65 million in operating income during the TOA period.
