Apollo Tyres rose 1.22% to Rs 70.65 at 11:08 IST on BSE, extending Monday's 4.96% rise triggered by 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 up 182.70 points, or 0.92%, to 20,077.80.
On BSE, 4.16 lakh shares were traded in the counter compared with average volume of 6.71 lakh shares in the past one quarter.
The stock hit a high of Rs 73 and a low of Rs 70 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 outperformed the market over the past one month till 7 October 2013, rising 7.38% compared with the Sensex's 3.24% rise. The scrip had also outperformed the market in past one quarter, rising 13.68% as against Sensex's 2.05% rise.
The mid-cap company has an equity capital of Rs 50.40 crore. Face value per share is Re 1.
Media reports suggest that Apollo Tyres is having problems with the United Steel Workers' union in the US and in the Chinese joint venture, where workers are objecting to the deal.
According to reports, Apollo Tyres is seeking a lower price than the original $35 per share it offered Cooper Tire & Rubber Company (Cooper) in June 2013 because of added costs for union matters. Cooper, however, said it does not agree with such a price reduction.
Reports suggest that under the current circumstances, the deal could fall apart. As per the terms of the agreement, if the deal is delayed past 31 December 2013 it can be terminated without penalty, reports added.
Cooper on Friday, 4 October 2013, said that it filed a complaint in a US court asking that Apollo Tyres be required to expeditiously close the pending merger between the two tyre companies in accordance with the terms of the definitive merger agreement. Media reports suggested that Apollo Tyres is disappointed by the legal action.
Cooper is asking the court to compel Apollo to take actions so that the transaction may close. Among other matters, the complaint says that Apollo is seeking to delay an agreement with the United Steelworkers (USW). The USW represents Cooper employees at facilities in Findlay, Ohio and Texarkana, Arkansas. An arbitrator ruled on 13 September 2013 that, as result of the pending merger, Cooper and Apollo must enter into new agreements with the union prior to closing. By delaying resolution with the USW, Apollo is breaching the merger agreement, Cooper said in a statement.
On 30 September 2013, Cooper's stockholders voted to approve its pending merger with a wholly-owned subsidiary of Apollo Tyres with more than 74% of Cooper's outstanding common shares voted in favor of the transaction. If finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world.
Cooper and Apollo announced the proposed merger on 12 June 2013 following unanimous approval by the boards of directors of both companies.
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.
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 slumped 27.72% to Rs 66.50 on Friday, 4 October 2013, from Rs 92 on 12 June 2013.
The stock, however, rose 4.96% to Rs 69.80 on Monday, 7 October 2013, on bargain hunting as uncertainty of the Cooper deal attracted investors. The stock has risen 6.24% in two sessions from Rs 66.50 on Friday, 4 October 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' 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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