Cooper Tire Steps Away From Proposed Merger With India's Apollo Tyres
What would have been an historic deal, creating a new tire company giant, has gone flat – and both sides are blaming each other for the blow-out.
On Monday, Ohio-based Cooper Tire & Rubber Company (NYSE: CTB) announced it was terminating its proposed merger with India's Apollo Tyres. The merger, reportedly worth $2.5 billion, would have created the seventh-largest tire company in the world.
It also ended what the New York Times said would have been the largest-ever acquistion of a U.S company by an Indian firm.
“It is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo and we have been notified that financing for the transaction is no longer available,” Cooper Chairman, CEO and President Roy Armes said in a press statement. “The right thing for Cooper now is to focus on continuing to build our business.”
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Armes added Cooper believes Apollo had breached the merger agreement and that his company “will continue to pursue the legal step necessary” to protect its interests.
In its own press statement, Apollo expressed disappointment with Cooper's actions – which it said left Apollo “no choice but to persue legal remedies.”
The proposed merger was in trouble almost as soon as it was announced in June. The two companies came into conflict, according to Reuters, over two separate labor issues, Apollo was unable to reach contract deals with Cooper's United Steelworkers Union employees. At the same time the Chengshan Group, which has a joint venture with Cooper in China and which opposed the merger, filed a lawsuit to end the partnership.
Some industry observers also questioned the $35 a share price that Apollo initially agreed to pay.
“It was a relatively full price being paid for Apollo to gain some North American exposure,” Bret Jordan, an analyst with BB&T Capital Markets, told the Times. “They were paying at peak margin prices.”
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