Michelin Will Buy Uniroyal Goodrich in $1.5-Billion Deal

French tire giant Michelin Group has agreed to acquire Uniroyal Goodrich Tire Co. in a deal valued at $1.5 billion, Michelin announced today.

The acquisition will sharply boost the size of Michelin, already one of the world’s largest tire companies, to challenge Goodyear Tire & Rubber Co. for the title of world’s biggest.

Michelin will pay $690 million for Uniroyal and will assume $810 million in debt, company officials said.

“We believe this is a fine opportunity for the Uniroyal Goodrich Tire Company,” said B. Charles Ames, chairman of Uniroyal Goodrich.

Hostile Takeover Thwarted

Ames also is a principal in the New York investment firm Clayton & Dubilier Inc., which acquired Uniroyal Inc. in 1985 to help it thwart a hostile takeover by Carl C. Icahn.

Uniroyal Goodrich was formed in 1986 as a 50-50 joint venture with the tire operations of B. F. Goodrich Co., and Clayton & Dubilier bought out Goodrich’s interest last year for more than $225 million.

“We are confident that Michelin’s additional financial and technological resources will make an important contribution to the Uniroyal Goodrich Tire Company’s future,” Ames said.

Uniroyal Goodrich will be operated as a subsidiary of the Michelin Group. Uniroyal Goodrich will keep its headquarters in Akron and will continue to make and distribute Uniroyal, BF Goodrich and other brands of tires, officials said.

Based in France

Michelin Group is based in Clermont Ferrand, France. Michelin, which has U.S. headquarters in Greenville, S.C., employs 16,000 people at eight tire plants in the United States and Canada. Uniroyal Goodrich owns seven plants in the two countries and employs about 18,500 workers.

Uniroyal will continue to have its own board of directors and retain its corporate identity, Michelin spokesman Jim Morton said.

The Michelin Group reported 1988 sales of $8.7 billion. Uniroyal Goodrich had sales of $2.2 billion in 1988.

Goodyear had sales of about $11 billion last year.

“We expect to see positive results both short-term and long-term, when Michelin’s technology and research are added to our own capabilities,” said Sheldon R. Salzman, president and chief operating officer of Uniroyal Goodrich.

“This transaction will mean continued job security for our employees and a stronger Uniroyal Goodrich in the future,” he said.