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Goodyear to buy rival Cooper Tire for $2.8 billion

Goodyear Tire & Rubber Co.

agreed to buy Cooper Tire & Rubber Co
, a deal that Goodyear said would allow it to reduce costs and build out its businesses in the U.S. and China.

Goodyear said Monday it will pay about $2.8 billion in cash and stock for its smaller rival, including $41.75 a share in cash for Cooper’s shares, which rose about 30% to $56.86 in late morning trading. Goodyear’s shares increased 22% to $16.97.

The combined company would generate annual revenue of roughly $17.5 billion and have some 72,000 employees globally, according to an investor presentation. Cooper’s tire brands include its namesake line and Mastercraft.

Goodyear Chief Executive Richard Kramer said on a call with investors the proposed acquisition would lift the combined company’s sales volumes of replacement tires in the U.S. to about 64 million. In China, the deal would help Goodyear sell more new and replacement tires, with the latter market expected to grow quickly in the coming years, he added.

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