Sep 8 2006
The Goodyear Tire & Rubber Company has agreed to sell its global tire fabric operations to Hyosung Corporation, pending government and regulatory approvals. The transaction is also subject to certain closing conditions.
Goodyear and its affiliates will receive approximately $80 million for their tire fabric manufacturing plants and assets, which include operations in Decatur, Alabama; Utica, New York; Americana, Brazil; and Colmar-Berg, Luxembourg, subject to post-closing adjustments. The facilities, which employ about 1,000 people, produce and treat fabric that is used in Goodyear's tires.
In addition, Goodyear and Hyosung, a multinational corporation with substantial tire reinforcement operations, would, upon closing, sign a multi- year supply agreement. Goodyear anticipates purchases of approximately $350 million to $400 million in the first year. The tiremaker said it believes that this agreement could provide it with significant cost savings and improved cash flow. The asset transaction is not expected to result in a material gain or loss.
"As Goodyear drives for improved profitability, we are focusing more activity and investment on our core business of providing innovative consumer and commercial tires for our customers," said Robert J. Keegan, Goodyear chairman and chief executive officer.
"Our fabric associates manufacture outstanding products and have made important contributions to Goodyear over the decades. We thank them for these contributions," he said. Hyosung, headquartered in Seoul, South Korea, has produced tire fabric since 1968. It has operations in its home country as well as in China and the United States.