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Goodyear/Cooper Tires Case Study

FIN 461: Financial Cases & Modeling

Arizona State University

2025

Zach Spanke

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Assumptions

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COGS, SG&A, Depreciation = Percent of Sales

Terminal Growth Rate = 2%

Tax Rate = 24.6%

CapEx = Depreciation

WACC = 10.2%

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Standalone DCF Valuation

Standalone DCF Summary

  • Values Cooper on a standalone basis with no synergies.�
  • Implied EV/EBITDA = 6.5× (in line with peers).�
  • Intrinsic value ≈ $68/share.�
  • Indicates undervaluation vs. the $45.50 price that Goodyear payed.

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DCF Valuation With Synergies

DCF Valuation with Synergies Summary

  • Table shows per-share value under varying cost-synergy and revenue-growth assumptions.
  • Full realization (100% cost + 15% growth) → ≈ $126/share.

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Comparable Multiple Valuation

Comparable Multiple Valuation

Methodology:

  • Used EV/EBITDA and EV/Sales multiples from peer companies (Exhibit 8).
  • Calculated implied Enterprise Value, then subtracted debt and added cash to find implied equity value.
  • Divided equity value by 50.84 million shares outstanding to find implied share price.

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Conclusions:

  • Goodyear’s $45.50 offer was below the midpoint of every valuation method and near the low end of most ranges.
  • Based on the data, Cooper appeared undervalued at that price — DCF and multiple analyses suggest a fair value closer to $60–$90+ per share.
  • When factoring in expected synergies ($165M in annual cost savings and $250M in working capital improvements), the deal looks even more attractive for Goodyear.
  • The offer likely reflected risks like antitrust violations or integration challenges we don’t have access to, such as plant overlap or execution uncertainty.
  • Overall, the numbers suggest Goodyear got a great deal, while Cooper shareholders likely sold below full value.
  • If I had to put a top dollar on it, I think Goodyear could have paid $65/Share and it still would have been a solid deal.

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