Goodyear may sell Indian farm tyres business

Goodyear India (GIL) has informed that the parent, The Goodyear Tire & Rubber Co., USA (GTR), is reviewing the farm tire business of the Company to evaluate all strategic, operational and financial opportunities related to that business.

• In July 2024, GTR sold it’s off-the-road business to Yokohama for $905 million
• It is now working with advisors to explore a sale of the Indian farm tire business
  • The farm tire division produces specialised tires for agricultural machinery and equipment, serving the agricultural sector across India.
  • It is the segment market leader with 50% share.
  • Value of the business is speculated at Rs 2,5000-2,700 cr.

GTR’s strategic review aims to optimize Goodyear’s portfolio and cut costs, following pressure from activist shareholder Elliott.

(In Nov 2023, Goodyear had announced a strategic review and portfolio optimisation exercise that involved strategic alternatives for three of its verticals – chemical business, Dunlop brand of tyres and it’s off-the road business to overhaul its portfolio and cut costs with the goal of raising more than $2 billion in gross proceeds. The company had said the exercise which will include footprint adjustments and plant optimization, should drive an annual run-rate benefit of $1 billion by the end of 2025 and also drive benefits of $300 million in that time. This was done after activist shareholder Elliott came into the company and has been harping on radical changes)

For ease of reference, GIL’s current mcap is Rs 2,149 cr. If the sale were to go through, I expect a significant part of proceeds to get distributed to shareholders given the current ongoing restructuring happening at the parent Company.

74% is owned by the parent. I expect the parent to look to take back the money from sale and hence the expectations of the dividend distribution.