06:48 AM EDT, 07/22/2024 (MT Newswires) -- Goodyear Tire (GT) will sell its off-the-road tire business to Japan's Yokohama Rubber in a deal worth $905 million in cash, as the tire manufacturer executes its plan to boost margins and reduce debt.

The business provides tires globally for surface and underground mining, construction and quarry, as well as port and industrial end markets, Goodyear said in a statement on Monday. The company will retain its business providing off-the-road tires for US military and defense applications.

Yokohama Rubber will acquire all shares of Nippon Giant Tire, which operates the off-the-road plant in Japan, and Goodyear Earthmover in Australia, as well as certain off-the-road assets at other global plants and facilities, the company said in a separate statement. Goodyear's business has 500 employees and generated $678 million in sales in fiscal 2023, according to Yokohama Rubber.

Goodyear in November launched strategic reviews for its chemicals business, Dunlop brand and off-the-road tire operations, as part of its transformation strategy. The company said at the time these initiatives could generate over $2 billion in gross proceeds.

During a Nov. 15 conference call with analysts, Chief Financial Officer Christina Zamarro said the off-the-road business required "significant" capital to achieve competitive scale, which was "unlikely" in the foreseeable future. "As a result, we've decided to assess opportunities to potentially monetize this business," Zamarro said at the time.

The deal, which requires approval from regulators, is expected to complete by early next year. Goodyear aims to use the proceeds from the transaction to reduce debt and finance initiatives related to the transformation plan.

Goodyear will also manufacture some off-the-road tires for Yokohama for an initial period of up to five years after the deal completes, as part of a product supply agreement.

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