| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 7, 2025, The Goodyear Tire & Rubber Company, an Ohio corporation (the “Company”), and Sumitomo Rubber Industries, Ltd., a company organized under the laws of Japan (the “Buyer”), entered into a Purchase Agreement (the “Agreement”) relating to the sale of the Company’s rights to the Dunlop brand for consumer, commercial and other specialty tires, together with certain associated intellectual property and inventory.
Pursuant to the Agreement, and upon the terms and subject to the conditions set forth therein, at closing (a) the Company and its applicable affiliates have agreed to sell to the Buyer and its applicable affiliates, and the Buyer and its applicable affiliates have agreed to acquire from the Company and its applicable affiliates, the Company’s rights to the Dunlop brand in Europe, North America and Oceania (“Dunlop Brand Rights”) for consumer, commercial and other specialty tires, together with certain associated intellectual property, for a purchase price of $526 million; (b) the Buyer will also pay Goodyear Operations S.A. a “Transition Support Fee” of $105 million for its support in transitioning the Dunlop brand, related intellectual property, and the facilitation of the transition of Dunlop customers to the Buyer and its applicable affiliates; and (c) the Buyer and its applicable affiliates will purchase the Company’s and its applicable affiliates’ existing Dunlop tire inventory (the transactions contemplated by the Agreement and the ancillary agreements described below, the “Transaction”). The Company will retain ownership of the Dunlop Brand Rights for its motorcycle tire businesses in Europe and Oceania.
The closing of the purchase and sale is subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals; the absence of any judgements or orders enjoining or otherwise prohibiting the Transaction; the accuracy of the representations and warranties of the other party; the compliance of each party with its covenants in all material respects; and the absence of a material adverse effect with respect to the Dunlop business operated by the Company.
The Agreement contains representations, warranties and covenants that are customary for a transaction of this type, including, among others, covenants by the Company to manage the Dunlop Brand Rights in the ordinary course between execution of the Agreement and closing of the Transaction (“Closing”).
The Agreement contains customary termination rights, including if Closing has not occurred on or prior to October 7, 2025 (as it may be extended, the “Outside Date”), subject to certain rights of each party to extend the Outside Date if certain regulatory conditions to Closing have not been satisfied.
The Agreement also contemplates that, at Closing, the Company and the Buyer (or their respective affiliates) will enter into a number of ancillary agreements. These agreements include, among others: (a) a transition license agreement, pursuant to which the Company will continue to manufacture, sell and distribute Dunlop-branded consumer tires in Europe for an initial period from Closing until December 31, 2025, which may be extended to December 31, 2026, and during which the Company will pay the Buyer a royalty on such Dunlop sales but will otherwise retain all profits therefrom; (b) a transition offtake agreement, pursuant to which the Company will sell to Buyer and Buyer will purchase from the Company certain Dunlop-branded consumer tire products for a period of up to five years, commencing after termination or expiration of the transition license agreement, subject to the terms and conditions set forth therein; and (c) the Company will license back the Dunlop brand from the Buyer for commercial (truck) tires in Europe on a long-term basis, subject to a royalty on sales. The transition offtake agreement stipulates minimum purchase quantities of 4.5 million tires per year for the five-year term, on a take-or-pay basis. The Buyer may terminate the transition offtake agreement early after the third year, subject to payment of a termination fee.
Pursuant to the Agreement, the Company will indemnify the Buyer against losses actually incurred or suffered by the Buyer as a result of or relating to breaches of representations and warranties, covenants or obligations by the Company, excluded liabilities, certain pre-closing tax matters, and exercise of the Company’s use of transferred intellectual property in connection with certain activities arising out of or relating to the Transaction, in each case, subject to limitations set forth in the Agreement.
