Indian tyre major Apollo Tyres Ltd. Wednesday announced it has signed a definitive agreement to acquire the US-based Cooper Tire & Rubber Company for around Rs.14,500 crore (US $2.5 billion) in all-cash transaction.
In a statement, Apollo Tyres said a wholly owned subsidiary of the company will acquire Cooper and the terms of the deal have been unanimously approved by the boards of both the companies.
As per the agreement, shareholders of Cooper will receive $35 per share in cash and the transaction represents a 40 percent premium to Cooper's 30-day volume weighted average price.
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.
With a combined $6.6 billion in total sales in 2012, the combined company will have a full range of brands and greater ability to satisfy customer needs in the US, the European Union, as well as fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth.
"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 tyre industry, with an extensive distribution network and manufacturing infrastructure, and a particularly robust presence in North America and China," Onkar S. Kanwar, chairman, Apollo Tyres, was quoted as saying in the statement.
Cooper, the 11th-largest tyre company in the world by revenue, was founded in 1914 and supplies premium and mid-tier tyres worldwide with brands Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
The combination is expected to deliver value creation benefits of approximately Rs.465-700 crore (US$80-120 million) per annum at the EBITDA (earnings before interest, tax, depreciation and amortisation of expenses) level, Apollo Tyres said.
"This is a compelling transaction that is in the best interest of Cooper's stockholders and offers attractive benefits to our customers and employees," Roy Armes, Cooper's chairman, chief executive officer and president was quoted as saying in the statement.
According to Apollo Tyres, the transaction is expected to be closed within the second half of 2013 subject to regulatory approvals and the green signal from Cooper's shareholders.
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.
"The combined company's diversified product offering will serve the passenger car, light and heavy truck, farm, and off-the-road vehicle segments. Together, we will have a significant presence in each of the three largest automotive markets in the world, namely the United States, Europe and China," Neeraj Kanwar, vice chairman and managing director, Apollo Tyres was quoted as saying in the statement.
