Akron, OH-based Goodyear Tire & Rubber Co. has finalized the sale of its North American farm tire assets to Titan Tire Corp., a subsidiary of Titan International, for $100 million.
The deal involves Goodyear’s farm tire manufacturing plant, property and equipment in Freeport, IL, plus tire inventories and a licensing agreement with Titan to pay a royalty to manufacture and sell Goodyear-branded farm tires in North America.
However, Goodyear said it’s going to losing $65 million on the deal, mainly due to the cost of curtailing employee pension and post-retirement medical plans. This will result in $60 million in charges against Goodyear’s fourth quarter 2005 earnings, with the remaining $5 million to be recorded during 2006, the tire company said.
The sale also reduces Goodyear’s revenue from the North American tire market by about $200 million annually, said Jonathan Rich, president of the company's North American tire business. Rich added the divesture would eliminate further investment in the farm tire business and should increase profitability.
“This transaction helps that relationship continue and allows us to increase our focus on our core consumer and commercial tire businesses,” said Rich.