Carlyle buys Goodyear’s engineered products unit

Industrial Distribution staff -- Industrial Distribution, 3/26/2007 4:20:00 PM

The Carlyle Group plans to buy Goodyear Tire & Rubber Co.’s  engineered products division for $1.475 billion in cash.

The deal between the Washington, D.C.-based private equity firm and the maker of conveyor belt, hose and rubber products is subject to a number of conditions, including Carlyle reaching an agreement with the United Steelworkers.

A strike by the union caused a big drop in the unit’s fourth-quarter sales last year, when total sales were $1.51 billion.

Should the sale go through, Carlyle will be able to use the Goodyear brand and other trademarks for 12 years, with an option to extend that arrangement by a decade.

Goodyear said it expects the sale to close by the end of June, but if the agreement falls apart the company will receive a $50 million “break-up fee.” The proceeds from the deal will be used to reduce debt and benefits costs, the company said.

The industrial products division’s headquarters would stay in Akron, Ohio, with current management, including president and CEO Timothy Toppen, remaining in place. The unit has about 6,500 employees worldwide, working in 32 facilities around the globe.

Carlyle is one of the world’s largest private equity firms, with $54.5 billion under management and investments in more than 185 companies.

The firm sold Milwaukee-based Rexnord Corp., which it bought in 2002 for $913 million, to fellow equity goliath Apollo Management last year for $1.8 billion.

Carlyle also owns a majority stake in Japanese hoist and crane manufacturer Kito Corp., which it acquired for nearly $112 million in 2003.

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