- Activist investor Elliott Investment Management L.P. has written a letter to Goodyear Tire & Rubber Co (NASDAQ:GT) Board of Directors highlighting steps for value creation in the company.
- Elliott has an approximately 10% economic interest in the company.
- Despite Goodyear’s strong brand, leading market share and favorable industry tailwinds, Goodyear’s stock has meaningfully and consistently underperformed, Elliott noted.
- The poor stock performance is a direct result of its significant margin erosion, suboptimal go-to-market strategy, and unfocused brand strategy, said the letter.
- In order to enhance the company’s prospects, Elliott suggested appointing a five new independent directors to the Board to improve governance.
- Also, suggestion was made to explore ways to monetize Goodyear’s company-owned store network, which Elliott believes is nearly worth Goodyear’s market capitalization given the multiples of auto aftermarket service businesses.
- Elliott urges the company to form an operational review committee to develop an operational and margin improvement plan.
- Elliott sees a $21 per share value-creation opportunity, 179% upside to current share price.
- Goodyear, in its reply, said, “We are reviewing Elliott’s recommendations, and we intend to meet with them to discuss their views in more detail.”
- “We regularly review the Company’s strategic plan to ensure that Goodyear is best positioned to deliver strong, sustainable shareholder value.”
- Price Action: GT shares are trading lower by 0.91% at $14.10 in premarket on the last check Friday.
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