Goodyear Tire & Rubber Co. said it will appoint new board members and launch a review of its business as part of a settlement with activist Elliott Investment Management.
The Akron, Ohio-based manufacturer is setting up a board committee to oversee a review of strategic and operational alternatives to maximize shareholder value, it said in a statement Tuesday. Evercore Inc., Lazard Ltd. and Goldman Sachs Group Inc. are serving as financial advisers to Goodyear.
The review could result in transactions including asset sales, according to people with knowledge of the matter who asked not to be identified discussing private information. Elliott and Goodyear declined to comment.
Goodyear’s shares have gained 33 percent in the past year, more than double that of the S&P 500. The shares fell 2.8 percent to $15.49 in New York trading Tuesday, giving the company a market value of about $4.4 billion.
Elliott in its letter in May said Goodyear’s company-owned retail network is undervalued and “nearly worth Goodyear’s market capitalization.” The activist investor also demanded five new directors and a operational review committee at the time.
Splitting up and selling its European division is also a possibility, a Wolfe Research report suggested, noting that rivals Pirelli & C SpA and Michelin trade at higher multiples.
The board committee is slated to make a public announcement on the operational reviews by Nov. 15, according to a regulatory filing.
“We have been encouraged by Goodyear’s openness to taking actions necessary to realize its full potential,” Elliott Senior Portfolio Manager Marc Steinberg and Portfolio Manager Austin Camporin said in Tuesday’s statement. “We are confident that our agreement enhances governance at Goodyear and ensures that the company will remain focused on long-term shareholder-value creation.”
Goodyear is naming three new independent directors supported by Elliott including Joseph Hinrichs, an automotive industry veteran who now serves as chief executive officer of railroad giant CSX Corp. The other appointees are Max Mitchell, CEO of aerospace and defense supplier Crane Co., and Tenneco Inc.’s former co-CEO, Roger Wood.
Elliott has agreed to customary standstill and voting agreements as part of the settlement, according to the statement.
