Goodyear’s $7.4B in debt is threatening its future

When Goodyear faced a hostile takeover in 1986, its stock price hovered around $23 a share.  British financier Sir James Goldsmith attempted a hostile raid on the rubber giant that year — buying up millions of cheap shares in an attempt to take control of the company. In response, Goodyear sold off its non-tire divisions and incurred $2.6 billion in debt to buy out Goldsmith’s shares. It’s one of the reasons Goodyear, the last of the big rubber companies in Akron and one of the city’s two Fortune 500 companies, is no stranger to hard times. The company, founded in 1898, has weathered world wars and financial crises. Now, it faces an uncertain future. On Nov. 10, Goodyear’s shares closed at just over $4, a historic low. One day earlier, the company ousted CEO Mark Stewart amid a $238 million third-quarter loss. Anurag Gupta is a professor of Banking and Finance at Case Western Reserve University s Weatherhead School of Management. (Photo courtesy of Case Western Reserve Univ