Gencorp Selling General Tire To West German Firm for $650 Million
AKRON, Ohio (AP) _ Gencorp Inc. will sell its General Tire unit to the West German tiremaker Continental AG for $650 million cash to help pay for a restructuring that thwarted a hostile takeover threat earlier this year, the U.S. conglomerate said Monday.
General Tire, one of the oldest and best known American tiremakers, employs 10,000 people nationwide.
″This agreement represents a critical accomplishment in our plan to restructure Gencorp,″ said A. William Reynolds, Gencorp’s chairman and chief executive officer. ″At the same time, it will strengthen the competitive position of both General Tire and Continental by creating a new world competitor in what has become a world industry.″
Gencorp, a conglomerate with interests in the automotive, broadcasting and aerospace industries undertook a restructuring this spring to escape a $2.2 billion takeover threat by General Partners, a group composed of Irvine, Calif.-based AFG Industries Inc. and Midland, Texas-based Wagner & Brown.
Under the restructuring, Gencorp went deeply into debt, bought back more than half its common shares and announced plans to sell some businesses. Gencorp’s debt is about $1.5 billion, said company spokesman Rip Tilden.
Gencorp had sales of $3.1 billion last year, $1.1 billion from its General Tire operations. Continental, one of Europe’s largest tire producers, had 1986 sales of $2.6 billion, $1.9 billion from its tire operations.
Earlier this month, Gencorp announced that its agreement to sell its RKO Pictures subsidiary to RKO Holding Co. had been terminated. But Reynolds said Monday that the sale of Gencorp businesses is proceeding satisfactorily.
Helmut Werner, president and chief executive officer of Continental AG, said the purchase will provide his company with a strong presence in the world’s largest tire market.
″This step is of vital strategic importance to us and will provide Continental with worldwide operations,″ he said.
Gencorp. also received an offer for General Tire from the management of the subsidiary.
General Tire supplies passenger, truck and special purpose tires for original equipment, replacement and private brands. The subsidiary operates a tire fabric plant, tire testing facilities and a synthetic rubber plant, Gencorp said.