8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): June 4, 2015

The Goodyear Tire & Rubber Company
__________________________________________
(Exact name of registrant as specified in its charter)

Ohio	1-1927	34-0253240
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
200 Innovation Way, Akron, Ohio		44316-0001
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 330-796-2121

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On June 4, 2015, The Goodyear Tire & Rubber Company (the “Company”) entered into a Framework Agreement (the “Agreement”) with Sumitomo Rubber Industries, Ltd. (“SRI”). Pursuant to the terms and subject to the conditions set forth in the Agreement, the Company and SRI have agreed to dissolve the global alliance between the two companies.

Under the global alliance, the Company owns 75% and SRI owns 25% of two companies, Goodyear Dunlop Tires Europe B.V. (“GDTE”) and Goodyear Dunlop Tires North America, Ltd. (“GDTNA”). GDTE owns and operates substantially all of the Company’s tire businesses in Western Europe. GDTNA has rights to the Dunlop brand and operates certain related businesses in North America. In Japan, the Company owns 25%, and SRI owns 75%, of two companies, one, Nippon Goodyear Ltd. (“NGY”), for the sale of Goodyear-brand passenger and truck tires for replacement in Japan and the other, Dunlop Goodyear Tires Ltd. (“DGT”), for the sale of Goodyear-brand and Dunlop-brand tires to vehicle manufacturers in Japan. The Company also owns 51%, and SRI owns 49%, of a company that coordinates and disseminates both commercialized tire technology and non-commercialized technology among the Company and SRI, the joint ventures and their respective affiliates (the “Technology JV”), and the Company owns 80%, and SRI owns 20%, of a global purchasing company (the “Purchasing JV”). The global alliance also provided for the investment by the Company and SRI in the common stock of the other.

The Agreement provides that:

1. the Company shall acquire from SRI the 25% interest in GDTE held by SRI;

2. the Company shall sell to SRI the 75% interest in GDTNA held by the Company; provided, however, the Company shall acquire control of the Dunlop-related trademarks for tire-related businesses in North America but shall grant SRI an exclusive license to develop, manufacture and sell Dunlop tires for motorcycles and for Japanese-owned vehicle manufacturers in North America;

3. the Company shall sell to SRI the 25% interest in DGT held by the Company;

4. the Company shall acquire from SRI the 75% interest in NGY held by SRI;

5. the Company shall sell to SRI the Huntsville test track used by GDTNA;

6. SRI will obtain exclusive rights to sell Dunlop-brand tires in those countries that were previously non-exclusive under the global alliance, including Russia, Turkey and certain countries in Africa;

7. the Company and SRI will enter into various supply agreements, licenses, transition services agreements, releases and other ancillary agreements in connection with the Agreement to give effect to the dissolution and/or to set forth arrangements between the Company and SRI following the dissolution;

8. the Company will pay SRI the net amount of $271 million in respect of the transactions set forth in (1) through (7) above;

9. the Company shall enter into and deliver a promissory note to GDTNA: (A) in the initial principal amount of approximately $55 million, (B) with a maturity date three years following the date of dissolution, and (C) at an interest rate of LIBOR plus 0.1%, which initial principal amount is 25% of the outstanding amount of an intercompany loan originally made in connection with the closure of GDTNA’s manufacturing facility in Huntsville, Alabama in 2003;

10. the Company shall liquidate and dissolve the Technology JV and the Purchasing JV and distribute the remaining assets and liabilities of the Technology JV and the Purchasing JV to the Company and SRI in accordance with their ownership interests in the Technology JV and the Purchasing JV, respectively; and

11. the Company and SRI shall conduct an orderly sale of the common stock held by SRI in the Company and by the Company in SRI.

The Company and SRI have each made customary representations, warranties and covenants in the Agreement, including, among others, covenants to operate the global alliance in the ordinary course of business, consistent with past practices, between the execution of the Agreement and the dissolution of the global alliance.

The Company and SRI each agreed to indemnify the other for certain losses arising out of breaches of representations and warranties, covenants and other specified matters, including product liability matters.

The closing of the transaction is subject to the receipt of antitrust and other governmental and third party approvals and other customary closing conditions, including SRI’s completion of a labor agreement with the United Steelworkers union for GDTNA’s Tonawanda, New York manufacturing facility.

The Agreement, effective upon the consummation of the transactions contemplated therein, would resolve the pending arbitration proceedings that were commenced in January 2014.

A copy of the Company’s news release announcing the foregoing transactions is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 News Release, dated June 4, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	The Goodyear Tire & Rubber Company
June 4, 2015	By:	David L. Bialosky
		Name: David L. Bialosky
		Title: Senior Vice President, General Counsel and Secretary

Exhibit Index

Exhibit No.	Description
99.1	News Release, dated June 4, 2015

EX-99.1

	News Release
Global Headquarters: 200 Innovation Way, Akron, Ohio 44316-0001	Media Website: www.GoodyearNewsRoom.com

MEDIA CONTACT: Keith Price

330-796-1863

ANALYST CONTACT: Christina Zamarro

330-796-1042

FOR IMMEDIATE RELEASE

Goodyear, SRI Reach Agreement to Dissolve Global Alliance

- Transaction accretive to adjusted net income beginning in 2016

- No impact to 2015, 2016 financial targets or capital allocation plan

AKRON, Ohio, June 4, 2015 – The Goodyear Tire & Rubber Company announced today that it has reached agreement with Sumitomo Rubber Industries, Ltd. (SRI) to dissolve the global alliance between the two companies.

Goodyear and SRI formed the global alliance in 1999. It primarily consists of four joint venture operating companies, one each in North America and Europe, and two in Japan.

“While we have derived value from the alliance over the last 16 years, Goodyear is well positioned today to pursue our strategy on our own,” said Goodyear Chairman and Chief Executive Officer Richard J. Kramer. “This successful resolution increases our flexibility to grow profitably as we continue to focus on delivering strong performance and sustainable economic value.”

Kramer concluded, “We are committed to a smooth and orderly transition that will be seamless to our customers and consumers in North America, Europe and Japan.”

The agreement announced today, when closed, would resolve the pending arbitration filed in January 2014. The agreement enables both companies to avoid the cost and uncertainty of the arbitration process.

Overview of Agreement

North American Joint Venture

• SRI (currently 25 percent interest) will acquire Goodyear’s 75 percent interest in Goodyear Dunlop Tires North America, Ltd. (GDTNA), which primarily manufactures and sells Dunlop-brand tires in North America, including full ownership of the joint venture’s tire plant in Tonawanda, N.Y.

• Goodyear will retain exclusive rights to sell Dunlop-brand tires in both the consumer and commercial replacement markets of the United States, Canada and Mexico as well as to non-Japanese vehicle manufacturers in those countries.

• In addition to assuming full ownership of the Dunlop motorcycle tire business in North America, SRI will have rights to sell Dunlop-brand tires to Japanese vehicle manufacturers in the United States, Canada and Mexico.

European Joint Venture

• Goodyear (currently 75 percent interest) will acquire SRI’s 25 percent interest in Goodyear Dunlop Tires Europe B.V. (GDTE).

• Goodyear will retain exclusive rights to sell Dunlop-brand tires in both replacement and original equipment consumer, commercial, motorcycle and racing markets in European countries where the current joint venture exclusively serves the market.

• SRI will obtain exclusive rights to sell Dunlop-brand tires in certain countries that were previously non-exclusive under the global alliance, including Russia, Turkey and certain countries in Africa.

Japanese Joint Ventures

• Goodyear (currently 25 percent interest) will acquire SRI’s 75 percent interest in Nippon Goodyear Ltd., which serves the replacement market in Japan with Goodyear-brand tires.

• SRI (currently 75 percent interest) will acquire Goodyear’s 25 percent interest in Dunlop Goodyear Tires Ltd., which serves the original equipment market in Japan with Goodyear- and Dunlop-brand tires.

• Goodyear will regain exclusive rights to serve the Japanese replacement and original equipment markets with Goodyear-brand tires.

• SRI will continue to have exclusive rights to sell Dunlop-brand tires in the Japanese replacement and original equipment markets.

Financial Terms of Agreement

Under the terms of the agreement, Goodyear will pay SRI $271 million upon closing of the transaction, which is expected in the fourth quarter of 2015. The transaction does not impact the company’s existing 2015 and 2016 financial targets or capital allocation plan. The outlay is included in the approximately $600 million designated for restructurings under the capital allocation plan. In addition, Goodyear will repay a pre-existing debt of approximately $55 million to SRI within three years from the date of closing. As a result of the agreement, Goodyear will also sell its 3.4 million shares of SRI common stock.

Goodyear expects the transaction to be accretive to its earnings beginning in the first quarter of 2016, related mainly to the elimination of minority interest in GDTE. Based on the company’s 2015 operating plan, the annual benefit to adjusted net income would be approximately $40 million to $50 million (15-18 cents per share).

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals as well as SRI’s completion of a labor agreement with the United Steelworkers union for the Tonawanda plant.

Conference Call

Goodyear will discuss this agreement on an investor conference call at 9 a.m. EDT on Friday, June 5. Participating in the call will be Laura K. Thompson, executive vice president and chief financial officer; and Christina L. Zamarro, vice president, investor relations.

Prior to the commencement of the conference call, the company will post the financial and other related information that will be presented on its investor relations Web site: http://investor.goodyear.com.

Investors, members of the media and other interested persons can access the conference call on the Web site or via telephone by calling either 800-895-4790 or 785-424-1071 before 8:55 a.m. EDT on June 5 and providing the Conference ID “Goodyear.” A taped replay will be available by calling 800-723-6062. The replay will also remain available on the Web site.

Goodyear is one of the world’s largest tire companies. It employs about 67,000 people and manufactures its products in 50 facilities in 22 countries around the world. Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry. For more information about Goodyear and its products, go to www.goodyear.com/corporate. GT-FN

Certain information contained in this press release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, that affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: our ability to implement successfully our strategic initiatives; actions and initiatives taken by both current and potential competitors; foreign currency translation and transaction risks; increases in the prices paid for raw materials and energy; a labor strike, work stoppage or other similar event; deteriorating economic conditions or an inability to access capital markets; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital expenditures; our failure to comply with a material covenant in our debt obligations; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.