 "Apollo Tyres acquires US-based tyre co, beats Tata-JLR deal")
The Delhi-based company today announced the execution of a definitive merger agreement under which a wholly-owned subsidiary of Apollo will acquire Cooper in an all cash deal.
The previous largest deal done by an Indian automotive company was by Mumbai-based Tata Motors when it acquired Jaguar Land Rover from Ford Motor Company for $2.3 billion for about Rs 9,200 crore in 2008.
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Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cooper stockholders will receive $35.00 per share in cash. The transaction represents a 40% premium to Cooper’s 30-day volume-weighted average price, a release from the company stated.
"This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution", release further stated
Cooper, founded in 1914, is the 11th-largest tire company in the world by revenue. The company supplies premium and mid-tier tires worldwide through brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
The combined company will be the seventh-largest tire company in the world and will have a strong presence in high-growth end-markets across four continents. The combination is expected to deliver value creation benefits of approximately Rs 465-700 crores (US$80-120 million) per annum at the EBITDA level, stated Apollo.
These ongoing benefits are expected to be fully achieved after three years and derived from operating scale, sourcing benefits, technology, product optimization, and manufacturing improvements. The transaction is expected to be immediately accretive to Apollo’s earnings.
Onkar S Kanwar, Chairman, Apollo Tyres, stated, “This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world. Cooper is one of the most respected names in the tire industry, with an extensive distribution network and manufacturing infrastructure, and a particularly robust presence in North America and China.
The combined company will be uniquely positioned to address large, established markets, such as the United States and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry.”
Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. served as financial advisors and investment firm Greater Pacific Capital acted as strategic and financial advisor to Apollo.
Standard Chartered is the sole provider of transaction financing at the Apollo Tyres level and is also the structuring advisor. Morgan Stanley Senior Funding, Inc., Deutsche Bank Securities Inc., Standard Chartered and Goldman Sachs Bank USA are joint lead arrangers providing committed funding to Apollo’s acquisition subsidiary.
Sullivan & Cromwell LLP and Amarchand & Mangaldas & Suresh A Shroff & Co served as legal advisors to Apollo. BofA Merrill Lynch served as financial advisor and Jones Day served as legal advisor to Cooper.
The close of the transaction, assuming timely regulatory approvals and other customary closing conditions, as well as approval by Cooper’s stockholders, is expected to take place within the second half of 2013.
Following the close, Cooper will become a privately held company and its common stock will no longer be traded on the New York Stock Exchange. It is expected that Cooper will continue to be led by members of its current management team and will continue to operate out of its facilities located around the world.
Cooper will continue to recognize the labor unions and honor the terms of collective bargaining agreements presently in effect while generally maintaining compensation and benefit levels for non-union employees.