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Cooper Tire Acquisition (Tables) - Cooper Tire | 6 Months Ended
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Jun. 30, 2021
Business Acquisition [Line Items] |
Calculation of Merger Consideration | The calculation of the Merger Consideration is as follows:
(In millions, except share and per share amounts) |  | Shares |  |  | Per Share (4) |  |  | Total |
Cash paid for Cooper Tire Shares(1) |  |  |  |  |  |  |  | $ | 2,121 |
Cash paid for other Cooper Tire incentive compensation awards(2) |  |  |  |  |  |  |  |  | 34 |
Cash component of the Merger Consideration |  |  |  |  |  |  |  | $ | 2,155 |
Shares of Goodyear Common Stock issued to Cooper Tire Stockholders(3) |  |  | 46,060,349 |  |  | $ | 20.46 |  |  |  | 942 |
Merger Consideration |  |  |  |  |  |  |  | $ | 3,097 |
(1) The cash component of the Merger Consideration is computed based on 100% of the outstanding shares of Cooper Tire common stock, including shares issuable pursuant to the conversion of certain equity-based awards outstanding under Cooper Tire’s equity-based incentive compensation plans (“Cooper Tire Shares”), being exchanged, in part, for the per share cash amount of $41.75. Awards outstanding under Cooper Tire equity-based incentive compensation plans that were converted include Cooper Tire restricted stock units and Cooper Tire performance stock units. These Cooper Tire equity-based awards were canceled and each share equivalent unit was converted, as appropriate, into the Merger Consideration.
(In millions, except share and per share amounts) |  | Shares |  |  | Per Share |  |  | Total |
Shares of Cooper Tire Common Stock outstanding as of the Closing Date |  |  | 50,523,922 |  |  |  |  |  |  |
Shares issuable pursuant to conversion of share units outstanding under Cooper Tire equity-based compensation plans |  |  | 269,238 |  |  |  |  |  |  |
Cooper Tire Shares |  |  | 50,793,160 |  |  | $ | 41.75 |  |  | $ | 2,121 |
(2) Cash consideration for the settlement of outstanding Cooper Tire stock options, Cooper Tire performance cash units and Cooper Tire notional deferred stock units, all of which were cancelled at the Closing Date and paid in cash. (3) The stock component of the Merger Consideration is computed based on a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper Tire Share being exchanged. Shares issued of 46,060,349 are comprised of 45,824,480 of newly issued shares and 235,869 of shares issued from treasury.
|  | Shares |  |  | Exchange Ratio |  |  | Total |
Cooper Tire Shares |  |  | 50,793,160 |  |  |  |  |  |  |
Less: Cooper Tire Shares settled in cash(5) |  |  | 9,975 |  |  |  |  |  |  |
|  |  | 50,783,185 |  |  |  | 0.907 |  |  |  | 46,060,349 |
(4) Represents the closing market price of our common stock as of June 4, 2021, the last trading day prior to the Closing Date. (5) Represents fractional and certain other shares that were settled in cash. The Merger Consideration was allocated on a preliminary basis as of the Closing Date. Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable. Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Cooper Tire are recognized and measured at fair value. The determination of the fair values of certain assets acquired, including Inventories, Property, Plant and Equipment, Goodwill, Intangible Assets, and Deferred Income Taxes, is dependent upon completion of further fair value analysis by the Company. The determination of the fair values of certain liabilities assumed is dependent upon completion of certain actuarial and other valuations and studies. Given the complex nature of the related valuations and analyses to be completed and the timing of the acquisition, the preliminary purchase price allocation is subject to change. The final valuation of assets acquired and liabilities assumed may be materially different from the estimated values shown below. The following table sets forth the preliminary allocation of the Merger Consideration to the identifiable tangible and intangible assets acquired and liabilities assumed of Cooper Tire, with the excess recorded to Goodwill:
(In millions) |  | As of June 7, 2021 |
Cash and Cash Equivalents |  | $ | 231 |
Accounts Receivable |  |  | 621 |
Inventories |  |  | 693 |
Property, Plant and Equipment |  |  | 1,372 |
Goodwill |  |  | 475 |
Intangible Assets |  |  | 1,086 |
Other Assets |  |  | 362 |
|  |  | 4,840 |
Accounts Payable — Trade |  |  | 464 |
Compensation and Benefits |  |  | 386 |
Debt, Finance Leases and Notes Payable and Overdrafts |  |  | 151 |
Deferred Tax Liabilities, net |  |  | 347 |
Other Liabilities |  |  | 374 |
Minority Equity |  |  | 21 |
|  |  | 1,743 |
Merger Consideration |  | $ | 3,097 |
Schedule of Identifiable Tangible and Intangible Assets Acquired and Liabilities Assumed | The estimated fair values of the identifiable intangible assets acquired, their estimated useful lives and the related valuation methodology are as follows:
(In millions) |  | Preliminary Fair Value |  |  | Range of Useful Lives |  | Valuation Methodology
Trade names (indefinite-lived) |  | $ | 310 |  |  | N/A |  | Relief-from-royalty
Trade names (definite-lived) |  |  | 40 |  |  | 13-15 years |  | Relief-from-royalty
Customer relationships |  |  | 730 |  |  | 7-16 years |  | Multi-period excess earnings
Non-compete and other |  |  | 6 |  |  |  |  |
|  | $ | 1,086 |  |  |  |  |
Schedule of Supplemental Cash Flow Information related to the Acquisition | The following table presents supplemental cash flow information related to the acquisition of Cooper Tire:
(In millions) |  |  |
Cash component of the Merger Consideration |  | $ | 2,155 |
Less: |  |  |
Cash acquired |  |  | 231 |
Restricted cash acquired |  |  | 68 |
Acquisition of Cooper Tire, net of cash and restricted cash acquired |  | $ | 1,856 |
Schedule of Net Sales and Earnings | Net sales and earnings related to Cooper Tire’s operations that have been included in our Consolidated Statements of Operations for the period from the Closing Date through June 30, 2021 are as follows:
(In millions) |  |  |
Net Sales |  | $ | 256 |
Income (Loss) before Income Taxes |  |  | (20 | )
Goodyear Net Income (Loss) |  |  | (6 | )
Schedule of Pro Forma Financial Information | The following table summarizes, on a pro forma basis, the combined results of operations of Goodyear and Cooper Tire as though the acquisition and the related financing had occurred as of January 1, 2020. The pro forma results are not necessarily indicative of either the actual consolidated results had the acquisition of Cooper Tire occurred on January 1, 2020, nor are they indicative of future consolidated operating results.
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
(In millions) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Net Sales |  | $ | 4,563 |  |  | $ | 2,655 |  |  | $ | 8,744 |  |  | $ | 6,253 |
Income (Loss) before Income Taxes |  |  | 232 |  |  |  | (957 | ) |  |  | 320 |  |  |  | (1,638 | )
Goodyear Net Income (Loss) |  |  | 167 |  |  |  | (748 | ) |  |  | 220 |  |  |  | (1,612 | )

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