Goodyear sells rights to Dunlop brand

When in 2015 Goodyear and Sumitomo dissolved their alliance, which had existed since 1999, the Americans received the rights to the Dunlop brand in Europe and North America, and the Japanese in Russia, Turkey, Asia, and South America. In 2023, Goodyear announced that it intends to sell the brand, and on January 7, 2025, the company confirmed that the buyer would be Sumitomo, whose president, Satoru Yamamoto, had previously stated that such a deal would help the Japanese tire manufacturer strengthen its position in the global market.

It is reported that Goodyear has signed a final agreement to sell the Dunlop brand, including trademarks and intangible assets necessary for using the brand in Europe, North America, and Oceania in the passenger, truck, and specialty tire segments, as well as related intellectual property.

Sumitomo will pay Goodyear approximately $701 million for the rights to the brand in the specified geographic regions, as well as for the purchase of Dunlop tire inventories.

Previously, Goodyear's CEO and President, Mark Stewart, stated that the company sells around 5 million Dunlop tires in Europe (where Sumitomo promotes its Falken brand) and "significantly fewer" in North America every year. In 2023, it was announced that the Dunlop brand would be transferred to the mid-price segment in the European market and would be positioned between Goodyear's premium tires and products of a lower class, such as Avon, Debica, Fulda, and Sava.

"We are optimizing our portfolio and reducing debt in line with our Goodyear Forward restructuring plan," Stewart noted in a statement on January 7, 2025. "This transaction will not only generate significant value for our shareholders but also allow Goodyear to focus on developing our core brands."

The deal is currently awaiting approval from regulatory authorities and is expected to be closed by mid-2025. The funds received will be used by Goodyear to reduce debt and finance other initiatives under the restructuring plan. In addition to the Dunlop brand, the company also plans to sell its OTR tire and chemical products businesses.

"Our team has carried out a comprehensive process to increase Goodyear's profitability through the sale of our Dunlop brand, and we are more than satisfied with the result," said Christina Zamarro, Goodyear's Executive Vice President and Senior Financial Officer. "We will work closely with Sumitomo to ensure a smooth transition for our customers."

The agreement implies that Goodyear will receive $526 million for the Dunlop brand and related intellectual property, as well as $105 million for support during the transition period, including planning, distribution, and logistics. Additionally, Sumitomo will buy already manufactured Dunlop tires for the consumer sector, and the exact cost of the inventories to be acquired has not been determined yet, but Goodyear estimates it at $70 million.

Goodyear will continue to produce and sell consumer-class tires under the Dunlop brand at least until December 31, 2025, with the possibility of extending this period, and will either pay Sumitomo royalties or retain the profit from sales, as stipulated in the Transition License Agreement (TLA), which will be automatically extended for another year, until December 31, 2026, unless the parties agree on the terms of its termination. The transition period is expected to allow Sumitomo to "effectively absorb the Dunlop brand and maintain the current level of customer service."

When the TLA is terminated, Goodyear will supply certain Dunlop brand tires to Sumitomo in the European market under the Transition Offtake Agreement (TOA), which provides for minimum purchase volumes of 4.5 million tires per year for five years, subject to full payment in case of refusal to supply. Sumitomo may terminate the agreement in advance by notifying Goodyear 12 months in advance and paying a stipulated fee. The contract also provides for a markup for Goodyear on the costs of each sold tire (including raw material procurement).

Goodyear will be able to sell Dunlop truck tires under a license with royalty payments in the long term, and this license agreement can be terminated at any time after it comes into effect.

As noted by Goodyear, the sales volume of Dunlop tires in the consumer sector (tires for passenger cars, light trucks, and SUVs) in 2023 amounted to $532 million. In the truck tire segment, revenue was $201 million, and in the specialized tire market, excluding motorcycle tires, it was $22 million. Under the agreement, Goodyear will retain the rights to the Dunlop brand in the motorcycle tire sector in Europe and Oceania.

Goodyear expects that during the term of the TLA, the deal will not have a significant impact on the company's operating profit, which will decrease by approximately $65 million per year after its completion, while the Offtake Agreement is in effect, "unless measures are taken to improve operational profitability." Additionally, the profit may be affected by various factors, such as debt servicing savings, etc.

The Dunlop brand is named after the inventor of pneumatic tires, John Boyd Dunlop, and has a history dating back to the late 19th century. In addition to Goodyear and Sumitomo, tires under this brand can be produced by a number of companies, such as the British Dunlop Aircraft Tyres and the Indian Ruia Group. Overall, the brand's history is very complex, and, for example, in Malaysia, the rights to it are held by the German Continental.

As noted by Sumitomo, the company will be able to use the Dunlop brand in the automotive tire segment worldwide, except for India, Malaysia, Singapore, and Brunei, and in the motorcycle tire market, except for India, Europe, and Oceania.

"Our company acquired the rights to the Dunlop brand in various countries around the world in the 1980s and has experience producing and selling tires under this brand not only in Japan but also in Europe and North America," Satoru Yamamoto noted. "Thanks to the new agreement, we will be able to use the Dunlop brand almost worldwide, which creates a great opportunity for the development of our company, and we are very pleased with this."