Briton Drops Takeover Bid for Goodyear

Sir James Goldsmith gave up his controversial bid to take over Goodyear Tire and Rubber Co. today, just 48 hours after he was sharply criticized by Goodyear Chairman Robert Mercer and congressmen at a House subcommittee hearing in Washington.

Goodyear announced that it will buy back the 12.5 million company shares that Goldsmith and his investment group have acquired. The stake represents 11.5% of the company’s 109 million shares of outstanding stock.

Goodyear, the world’s largest tire company, also said it will reimburse certain expenses and agreed to drop legal action against Goldsmith’s companies.

In return, Goldsmith, an Anglo-French financier, agreed that his companies--General Oriental Bermuda I Ltd. partnership and General Oriental Delaware Ltd. partnership--will not acquire Goodyear stock for five years.

At the same time, Goodyear said it will buy back an additional 40 million shares of its stock on the open market for $50 a share.

Analysts said Goldsmith’s profit on the deal could be about $18.75 million.

Earlier this month, Goldsmith privately offered to buy the remainder of Goodyear’s shares for $49 a share, valuing the company at $5.3 billion. The bid ran into strong opposition from Goodyear and workers in its home base, Akron, Ohio.

Goodyear had also threatened to boost its stock price above Goldsmith’s offer price by cutting costs--including laying off workers--selling off most of its non-tire operations and buying back stock.

Goldsmith’s bid caused a great deal of antipathy, part of which was displayed at a House Judiciary Committee hearing Tuesday.