MELBOURNE (Reuters Breakingviews) – Accurate views on global finance in the Covid-19 era.
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PUMPED UP. Goodyear Tire & Rubber can make a positive turn on its plan to buy Cooper Tire & Rubber for $ 2.8 billion. While the target sees a 24% increase on shares that are already trading at a four-year high and hold some potential upside with a 16% stake in the company combined, it is the buyer who burns rubber.
Some of the $ 165 million of the expected synergies, worth taxed and capitalized, is worth much more than the price, according to Breakingviews calculations. He has to put them on much less than the usual 10 hours to balance things out. Even then, Goodyear believes the acquisition will take $ 450 million worth more today from tax benefits. And individual manufacturing savings may be forthcoming.
Moreover, the understandable return on investment from a contract would nearly double Goodyear’s presence in China, assuming Cooper generates what analysts ’operating profit analysts expect, more than 14%. That should help put Goodyear on a roll. (By Jeffrey Goldfarb)
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