Cooper Tire calls off Apollo merger deal

Cites lack of funds to drop $2.5-bn deal

The Financial Express - - FRONT PAGE - Bloomberg

US-BASED Cooper Tire & Rub­ber on Mon­day ter­mi­nated its $2.5-bil­lion merger agree­ment with In­dia’s Apollo Tyres. Cooper said Apollo no­ti­fied it that fi­nanc­ing for the deal was no longer avail­able. “It is time to move our busi­ness for­ward,” Cooper chair­man, CEO and pres­i­dent Roy Armes said. The an­nounce­ment fol­lows a Delaware Supreme Court rul­ing ear­lier this month in favour of Apollo in the spat over the merger.

COOPER Tire & Rub­ber dropped plans to merge with Apollo Tyres, say­ing fi­nanc­ing for the trans­ac­tion is no longer avail­able fol­low­ing a val­u­a­tion dis­pute with the In­dian com­peti­tor.

The US man­u­fac­turer “will con­tinue to pur­sue the le­gal steps nec­es­sary to pro­tect the in­ter­ests of our com­pany and our stock­hold­ers,” Find­lay, Ohio-based Cooper Tire said in a state­ment on Mon­day.

Cooper said on June 12 that Gur­gaon-based Apollo planned to buy the US tyre­maker for $35 a share in a $2.5 bil­lion deal. Cooper had ini­ti­ated le­gal ac­tion to force com­ple­tion of the pur­chase, say­ing ex­ec­u­tives at the In­dian con­ter­part had “buyer’s re­morse” and sought a price cut.

Apollo has con­tended the US com­pany’s value has de­clined partly be­cause of po­ten­tially costly con­tract talks with the United Steel- work­ers union and dif­fi­cul­ties get­ting fi­nan­cial data from Cooper’s Chi­nese part­ner, Cooper Cheng­shan (Shan­dong) Tire, which op­posed the deal.

Por­tions of the pro­posed deal have been fought in court. On De­cem­ber 19, Apollo’s lawyers asked Delaware Chancery Court Judge Sam Glasscock III to deny Cooper ex­ec­u­tives ac­cess to a $112.5 mil­lion let­ter of credit that cov­ers breakup fees.

The Delaware Supreme Court sent the case back to Glasscock ear­lier in De­cem­ber to de­cide whether Apollo wrong­fully vi­o­lated an agree­ment to buy the US tyre­maker.

Glasscock last month re­jected Cooper’s claim that Apollo breached the con­tract by drag­ging its feet in seek­ing to ne­go­ti­ate a con­tract with a the steel­worker’s union that would have helped clear the way for the deal. Glasscock al­lowed Cooper to ap­peal his rul­ing to Delaware’s high­est court, which de­clined to hear it.

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