The Goodyear Tire and Rubber Company has entered into a definitive agreement to divest its Dunlop brand to Sumitomo Rubber Industries (SRI).

This transaction encompasses the sale of trademarks and intangible assets for the Dunlop brand's consumer, commercial, and speciality tyre operations in Europe, North America, and Oceania, along with associated intellectual property.

The agreement will see SRI paying Goodyear a cash sum of nearly $701m at closing.

This includes the transfer of the Dunlop brand in the specified regions, a "transition fee" for support during the handover, and the purchase of the existing Dunlop tyre inventory.

The sale is part of Goodyear's strategic review under its Goodyear Forward transformation plan.

Subject to regulatory approvals and other standard closing conditions, the deal is expected to be finalised by mid-2025.

Goodyear plans to use the proceeds from this transaction to reduce debt and invest in initiatives aligned with its transformation plan.

Additionally, it will continue to produce and sell Dunlop branded consumer tyres in Europe until at least 31 December 2025, under a Transition License Agreement (TLA).

During the TLA period, Goodyear will pay royalties to SRI on Dunlop sales but will keep all profits from these sales.

The TLA may be extended until 31 December 2026, unless both parties agree to an earlier termination.

This arrangement aims to provide SRI with the necessary time to integrate the Dunlop brand into its European operations and ensure continued service for Dunlop customers.

Post-TLA, Goodyear will supply certain Dunlop branded tyres to SRI in Europe for five years as per a Transition Offtake Agreement (TOA), with stipulated minimum purchase quantities.

SRI has the option to terminate the TOA after three years with a one-year notice and a termination fee.

Goodyear president and CEO Mark Stewart said: “This is another important milestone as we continue to execute against our Goodyear Forward transformation plan.

“We are optimising our portfolio and reducing leverage to drive sustainable and substantial shareholder value creation

“Not only does the transaction deliver significant value for our shareholders, it better positions Goodyear to enhance our focus on the growth of our core brands.”

Furthermore, Goodyear will licence the Dunlop trademarks back from SRI for commercial tyres in Europe and retain rights to the Dunlop trademarks for its motorcycle tyre businesses in Europe and Oceania, paying a royalty on sales to SRI.

Goodyear Tire and Rubber Company executive vice-president and CFO Christina Zamarro said: “Our team conducted a comprehensive process focused on maximising value for Goodyear through a divestment of our Dunlop Brand, and we are very pleased with the outcome achieved.

“We are committed to working closely with SRI to ensure a smooth transition for customers of the Dunlop Brand.”