Goodyear set to deliver on divestment plan after it strikes deal to sell synthetic rubber business 

• The largest U.S. manufacturer of tires for car companies will sell the majority of its Goodyear Chemical arm to private equity firm Gemspring Capital in a deal expected to be finalized late this year. The $650 million in gross proceeds comes on top of the $1.6 billion it achieved from the sale of two other businesses earlier this year, reaching a key target from its Goodyear Forward restructuring plan.

Goodyear is close to closing the books on its divestment plan after the world’s third largest tire maker by volume struck a deal to sell most of its synthetic rubber business for $650 million in cash.

In 2023, the Fortune 500 company had agreed with activist shareholder Elliott Investment Management to sell off a trio of businesses with the goal of raising over $2 billion to pay down debt under its Goodyear Forward restructuring plan.

That target will now be reached after it completed the disposal of its Dunlop brand and off-highway tire operations in two separate transactions earlier this year that already raised a combined $1.6 billion in gross proceeds.

“With the sale of our chemical business, we continue to demonstrate our commitment to optimizing our portfolio and creating shareholder value,” CEO Mark Stewart said in a statement on Thursday.

Stock in Goodyear has outperformed the S&P 500, rising 25% year to date versus minor declines in the benchmark U.S. equity index.

Half of Goodyear Chemical’s $1 billion in annual revenue is from internal sales

The majority of its synthetic rubber activities will then be handed to private equity firm Gemspring Capital toward the end of this year. Goodyear will, however, retain facilities in Niagara Falls, N.Y., and Bayport, Texas, as well as the rights to the products made there. 

The transaction includes a long-term supply agreement to ensure Goodyear has access to the necessary raw materials for its tires, where it competes with larger rivals Michelin of France and Japan’s Bridgestone. Half of Goodyear Chemical’s roughly $1 billion in annual revenue is generated internally.

“We will work closely with Gemspring to help ensure a smooth transition for our associates, customers, and suppliers,” Stewart added.

The divestments, which will raise $2.2 billion in total, are a core pillar of its turnaround plan that was designed to be completed by the end of 2025. 

This story was originally featured on Fortune.com