Goodyear Tire & Rubber (GT) captured a huge value addition in its stock price just after the company set forth to buy Cooper Tire & Rubber Company with a total value of $2.8 billion. The transaction proved to be advantageous for shareholders of Cooper Tire & Rubber as they will get a cash amount of $41.75 per share along with the exchange ratio of 0.907 against each share of Cooper Tire which is fixed.
Goodyear Successful Strategy
The said deal will give Goodyear a boost in global tire industry and will strengthen its leadership position. It also comes up with certain tax benefits and creates positive synergies. The company believes that the particular deal will have immediate impact on its stock price and bring incremental growth in earning per share and will ultimately improve its balance sheet
According to the quarterly report provided by Goodyear, despite of all the challenges corona virus pandemic posed the company was doing well and it had easily beaten the analyst views on its earnings and revenues. The stock attained huge value after submitting its quarterly report. The decision of buying Cooper Tires came up with the several positive reviews by the financial analyst and it would further heighten company’s market position and bring growth prospects to earning per share.
Tire Market Anticipation
It is believed that tire market will rebound once the coronavirus pandemic gets over and the restrictions are lifted around the globe. Goodyear has already strengthened its position in the beginning of 2021 and is anticipated to sustain its market value and the stock might have more room to rise if the tire market sees an improvement in the near term.