Apollo Tyres rose 2.77% to Rs 66.85 at 15:10 IST on BSE on growing uncertainty about the status of the company's $2.5 billion deal to buy US-based Cooper Tire & Rubber Company.
Meanwhile, the BSE Sensex was down 38.78 points, or 0.19%, to 20,508.84.
On BSE, 4.44 lakh shares were traded in the counter compared with average volume of 6.17 lakh shares in the past one quarter.
The stock hit a high of Rs 67.85 and a low of Rs 65.60 so far during the day. The stock hit a 52-week high of Rs 101.50 on 8 May 2013. The stock hit a 52-week low of Rs 54.60 on 21 June 2013.
The stock had underperformed the market over the past one month till 15 October 2013, rising 0.46% compared with the Sensex's 4.13% rise. The scrip had also underperformed the market in past one quarter, falling 3.34% as against Sensex's 2.56% rise.
The mid-cap company has an equity capital of Rs 50.40 crore. Face value per share is Re 1.
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Apollo Tyres said it has filed counter-claim against US-based Cooper Tire & Rubber Company with the Delaware Court denying allegations made by Cooper that it is deliberately trying to delay the closure of the deal.
Cooper in its filing with the court, on 4 October 2013, had blamed Apollo for delay in settling issues with some of its labour from United Steel Workers (USW) union in the US plants. The USW represents Cooper employees at facilities in Findlay, Ohio and Texarkana, Arkansas. It said Apollo is also looking at reducing the deal price owing to labour issues at the company's US and China plants.
In its answer, Apollo denied the allegations made by Cooper regarding the course of its negotiations with the USW and confirmed that it has worked diligently to reach a settlement with the USW to enable Cooper to overcome the USW injunction prohibiting Cooper from consummating the merger, Apollo Tyres said on Tuesday, 15 October 2013.
Apollo said conditions precedent to closing had not been satisfied because the marketing period for the financing, central to Cooper's claims in its complaint, had never commenced and that Cooper has failed to meet its contractual obligations.
The statement said Apollo's response details Cooper's failures to provide information under the merger agreement about its lack of control of its Chinese subsidiary, Cooper Chengshan Tire, and Cooper's alleged breach of several representations, warranties and covenants in the agreement.
Apollo said it reaffirms that it believes that a merger with Cooper is strategically compelling and that it continues to work diligently to address the various post-announcement impediments preventing Cooper from consummating the merger.
Media reports suggest that Apollo Tyres will have to pay $112.5 million in case it decides to withdraw, while Cooper will have to pay a termination penalty of $50 million if it walks out of the deal. If the deal stretches beyond 31 December 2013, none of the companies has to pay anything.
On 12 June 2013, Apollo Tyres announced that it would acquire Cooper, a company listed on the New York Stock Exchange, in an all-cash transaction valued at approximately $2.5 billion. 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, Apollo Tyres said in a statement. If finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world.
Shares of Apollo Tyres were in downtrend ever since the company announced the deal on 12 June 2013, amid concerns that the large acquisition of US-based Cooper might impact the Indian company's balance sheet. The Apollo Tyres stock have slumped 27.39% from Rs 92 on 12 June 2013.
Cooper is the 11th largest tyre company in the world by revenue and it supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high-growth end-markets across four continents, Apollo Tyres said. With a combined $6.6 billion in total sales in 2012, the combined company will have a comprehensive portfolio of signature brands and greater ability to cross-sell products in diverse countries with negligible overlap, Apollo Tyres said.
Apollo Tyres will announce Q2 results on 13 November 2013. The company's consolidated net profit rose 19.5% to Rs 165.95 crore on 0.83% growth in total income to Rs 3200.94 crore in Q1 June 2013 over Q1 June 2012.
Apollo Tyres manufactures tyres and tubes for cars, trucks, farm equipment and light commercial vehicles. The company also manufactures automobile flaps and retreading materials.
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