Wed, Jan 01, 2014 - Page 15 News List

India’s Apollo Tyres sees shares rise as Cooper scraps deal

AFP, MUMBAI

Shares in India’s Apollo Tyres rose more than 11 percent yesterday morning after a US$2.5 billion deal to buy US-based Cooper Tire & Rubber collapsed following months of frustrating negotiations.

US manufacturer Cooper said it was scrapping the deal that would have created the world’s seventh-largest tire maker after being informed by Apollo that the financing for the takeover was no longer available.

“It is time to move our business forward,” Cooper CEO Roy Armes said in a statement late on Monday, after acrimonious negotiations that saw the parties end up in court.

Apollo Tyres shares climbed 11.15 percent to 113 rupees on the Bombay Stock Exchange yesterday. Cooper Tire shares rose 5.40 percent to US$24.20 in New York by Monday’s close.

Indian analysts were unhappy about Apollo’s bid, saying it was paying too much for the US company and would be overloaded with debt.

Apollo announced in June it would buy the much larger Cooper Tire in a debt-funded deal, but the move was never finalized after it became bogged down in labor problems embroiling Cooper’s US and Chinese operations.

The merger agreement was valid up to yesterday, after which Apollo could drop the deal.

In its statement, Cooper said the merger failed because Apollo did not live up to its undertakings, and it would pursue legal steps to protect the company.

The merger wound up in a US court over Cooper’s claims that Apollo was delaying the transaction to wrestle down the offer price and was suffering from “buyer’s remorse.”

Cooper chairman and CEO Roy Armes said during a Monday morning Webcast that Cooper never received a new offer from Apollo that came with committed financing and that presented “unreasonable risk” for his company.

Cooper executives vowed to pursue a reverse termination fee of US$112.5 million and other possible damages. They do not believe that the US firm owes Apollo the US$50 million termination fee that was part of the initial agreement.

Cooper will return to court with the Indian company to resolve some remaining issues, including whether Apollo made an appropriate effort to reach a deal with the union, chief financial officer Brad Hughes said.

Apollo on Monday said it had made “exhaustive efforts to find a sensible way forward over the last several months.”

The Indian tire maker denied Cooper’s allegations, but conceded it would be tough at the initial offer price to find lenders to finance the deal due to the US firm’s problems.

This story has been viewed 1094 times.
TOP top