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Cooper Tire & Rubber Company has rejected Apollo Tyres’ demand to cut the proposed $2.5-billion deal size by as much as 25 per cent.
Cooper, in its filing on Friday, said it was acting in the best interests of its stockholders, who overwhelmingly approved the pending merger with Apollo for $35 a share. Apollo had offered to buy Cooper at this price in June but later retracted over labour trouble at the latter’s China and US plants.
As outlined in the complaint it has filed in court against Apollo for dragging its feet on the agreement, Cooper has rejected Apollo’s efforts to obtain a reduction in share price. “Cooper does not agree that any such reduction is warranted,” went a statement it issued on Monday.
However, the shareholders of Apollo cheered the news that the deal was set to collapse over labour trouble. While Apollo’s shares went up one per cent on the BSE on Tuesday, Cooper’s fell 13 per cent on the NYSE to $25.72 on Monday’s closing.
“We are pleased that Apollo shares Cooper's commitment to the strategic merits of the transaction. The situations with the United Steelworkers (USW) and the joint venture partner and union in China are a direct result of the merger agreement, and are risks Apollo assumed under the merger agreement. The situation with the USW can be resolved in a timely manner, and we ask that Apollo proceed expeditiously toward resolution, working with Cooper,” the US company said.
With respect to China, Cooper explained in the complaint filed on October 4, and in an earlier proxy statement, that the company had been prevented by the joint venture partner and union from access to certain operational and financial information. “We continue to work toward resolving the issues in China through communication with the workers, union and the joint venture partner. Cooper looks forward to closing this compelling transaction, which will provide multiple benefits to both organisations, their employees, customers and communities,” Cooper said.
In a lawsuit filed in a US court last Friday, Cooper has alleged the Kanwar family which runs Apollo began looking for an ‘escape hatch’ to walk away from the takeover deal as soon as their stock price fell 39 per cent after the deal was announced.
