Goodyear to acquire Cooper for $2.8 billion, doubling presence in China

Goodyear's decision to buy rival Cooper for $2.8 billion will give it a much bigger global footprint, including in China, the world's largest car market.

The transaction is set for completion in the second half of the year.

In China, Goodyear's presence would nearly double and would increase the number of relationships with local automakers.

Goodyear is the world's third-largest tire manufacturer, following Japan's Bridgestone and France's Michelin.

While Goodyear will retain the third spot after the Cooper deal, its global annual sales total will increase from $12.3 billion to some $15 billion.

Shares of Goodyear and Cooper both surged Monday following news of the acquisition, each finishing the day up more than 20 percent.

Goodyear and Cooper are the two largest tire manufacturers in the US but lag behind rivals in market share and brand recognition in China.

Michelin, which accounts for about 12 percent of original tires fitted on new Chinese cars, ranked as the top brand in China last year trailed by Italy's Pirelli and Bridgestone.

The deal also strengthens Goodyear's leading position in the US while significantly growing in other North American markets.

Goodyear will compensate Cooper's shareholders in cash and stocks. It would fund the cash portion through debt financing.