Goodyear Acquires Cooper Tires in a Massive Deal

Today, we bring you exciting news from the tire industry. Goodyear Tires has agreed to acquire Cooper Tires for $2.8 billion. As a result, both companies saw their shares jump by more than 20%. You may have already heard this news on the TV or read about it on the internet. But that's not why we are here today. Instead of merely telling you about the acquisition, PitStopArabia will discuss the consequences of this acquisition. Let’s start.

Greater Market Share

Goodyear is the world's third-largest tire manufacturer. Even though the acquisition is not going to change its market position currently, it might do so in the future. According to reports, Goodyear will be able to add $3 billion to its revenue with the acquisition. Increased profits can help the tire giant to expand into more markets and gain a greater market share.

More Resources

Apart from a greater market share, the acquisition will help the company gain access to more resources. The resources are not just limited to the human or financial side. Cooper has ample experience in a variety of markets worldwide. With combined resources, Goodyear can better tackle challenges, especially those brought about by increased competition.

Better Presence

China is the world's biggest tire market, double the size of the US. Unfortunately, Goodyear and Cooper have failed to make a name for themselves here. Michelin accounts for 13% of original equipment tires in China. As a result, they lag rivals. With combined resources, they can make a renewed push in China and other markets. If it is successful, Goodyear can become the world’s biggest tire company.

Better Marketing

One reason for Goodyear and Cooper’s lack of success in China is brand recognition. Chinese consumers know very little about the two brands, instead opting for the local and other foreign brands. After the acquisition, Goodyear is in a position to increase its marketing budget and aim for greater brand recognition in markets like China.

Technological Prowess

Both companies offer superior technology in their products. With this acquisition, Goodyear gets access to Cooper’s technology. It means that Goodyear can offer Cooper Tires’ technology in their products, enabling them to offer more technologically advanced products to consumers.

More Variety

Goodyear and Cooper offer tires across a variety of vehicle classes. With the acquisition, customers will have access to more variety. If they cannot buy premium Goodyear tires due to budgetary constraints or non-availability, they can opt for Cooper Tires.

Diversified Human Resource

Once the acquisition is complete, Goodyear will have access to a diversified skill set. Depending on how they utilize it, Goodyear can convert it into a competitive advantage and gain ground on other tire manufacturers. A diversified workforce can lead to more innovative ideas that can help create new products. For instance, in one of the previous articles, we discussed how Continental made a smart tire for driverless cars. Similarly, Goodyear can develop such innovative products with the help of a diversified skillset.

Less Delivery Time

Despite its large presence, it can be challenging for an organization to deliver products on time. Supply chain issues and logistics are a problem for everyone. After the acquisition, the company will have access to Cooper Tires' supply chain and logistics. Hence, deliver time to customers and retailers will significantly reduce, which is excellent news.

Monopoly

There is a potential downside to this acquisition. Due to less competition, customers will have less choice, or Goodyear can abuse its market position by increasing prices.

Wrap Up

This concludes our article. If you have anything to add to the above information, send us your suggestions and feedback. It will be interesting to see how other tire manufacturers like Michelin and Bridgestone will respond to the acquisition. If they, too, start acquiring smaller tire companies, we may soon see an oligopoly.