Goodyear (GT) has a couple of flat tires that need fixing, contends noted activist investor Elliott Management.
The firm launched a brand new campaign against the storied tire maker on Thursday, citing poor margin performance versus rivals, weak board oversight of management, and ill-timed tire distribution deals.
Elliott is pushing for a sale or other motion on Goodyear’s 1,000-plus retail stores and the installation of 5 latest board members. The names of those board nominees couldn’t be learned.
Elliott thinks Goodyear might be price $32 a share under its plan. Goodyear stock rose as much as 15% on Thursday morning to $13.50 on news of Elliott’s involvement.
A Goodyear spokesperson didn’t return Yahoo Finance’s request for comment.
Sources aware of the matter tell Yahoo Finance that Elliott would really like a board refresh and a review of the management team. There’s also chatter about the fee of a latest docu-series celebrating Goodyear’s one hundred and twenty fifth anniversary given the lagging stock price and profit margins.
These sources added that the corporate could even be spending an excessive amount of to operate the legendary Goodyear blimp, though the firm is not advocating that Goodyear stop marketing via the highly visible blimp.
The talks with Goodyear are within the preliminary stages, the sources said.
The activist campaign comes amid several difficult quarters as the worldwide economy slows, inflation stays stubbornly high, and consumers keep off on tire price hikes.
In late October 2022, Goodyear revealed third quarter tire unit volumes fell 3% from the prior fiscal quarter. Alternative tire volume dropped 9%, underperforming a 3.5% decline for the general industry. Adjusted net income declined 43% yr on yr to $116 million while earnings got here in shy of analyst estimates.
Goodyear shares lost about 53% in 2022.
The corporate saw sales only rise by 0.7% in the primary quarter of 2023, and Goodyear lost $101 million within the quarter.
Prior to today’s pop, shares of Goodyear had fallen about 64% over the past five years.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Recommendations on deals, mergers, activist situations or anything? Email brian.sozzi@yahoofinance.com
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