Cooper Tire & Rubber’s acquisition by Apollo Tyres is expected to close within a matter of months, and the new owner may need to reckon with a unionised plant in Tupelo, Mississippi. According to US industry publication Tire Review, local media have reported the presence of the United Steelworkers union in town.
Apollo Tyres does not anticipate that alterations to India’s overseas investment regulations will influence its plans to acquire Cooper Tire & Rubber. On 14 August, the Reserve Bank of India (RBI) reduced the limit for overseas direct investment; with immediate effect the limit for overseas direct investment must be no more than 100 per cent of the Indian purchasing company’s net worth. The RBI will decide upon any overseas direct investment exceeding the 100 per cent limit on a case-by-case basis.
When Maine Industrial Tire was integrated into Trelleborg Wheel Systems following its acquisition late last year, its Brawler brand was taken on by the Swedish manufacturer. It has now announced the addition and planned global roll out of a range of Brawler brand large OTR solid tyres.
Tyre equipment manufacturer and software provider Mesnac has purchased a majority interest in US firm Test Measurement Systems, Inc. (TSMI) for an undisclosed amount. The TSMI brand and identity will be retained following the deal, states Mesnac. Dr. Jerry Potts, CEO of the Akron-based firm, and other senior TSMI management staff will remain with the business and work with Mesnac to identify opportunities for growth, product innovation and diversification.
The strike at the Cooper Chengshan plant in China’s Shandong Province has now been underway for more than two weeks, and although Cooper Tire and Apollo Tyres state this industrial action will have no effect on the planned takeover, union officials at the plant are equally adamant it shouldn’t take place.
On 26 July, the Hart-Scott-Rodino (HSR) review period for Apollo Tyres’ pending acquisition of Cooper Tire & Rubber expired with no action taken by the Federal Trade Commission or the Department of Justice in the US. In a statement issued on 2 August, Cooper Tire explained that the expiration of the HSR review period satisfies one of the conditions necessary for the acquisition transaction to close. Cooper and Apollo now expect that, subject to the remaining customary closing conditions, the transaction will be completed before the end of the year.
China’s Shandong Yongtai Chemical Group, manufacturer of the Durun tyre brand and the DMack tyres used in the World Rally Championship, and UK tyre wholesaler Treadsetters have jointly acquired automotive supplier Covpress. The two companies are believed to have paid £30 million to buy the Coventry-based firm, which employs around 450 people and manufactures body panels for vehicle manufacturers such as Jaguar Land Rover, Nissan and Renault. Chinese and UK media sources report Shandong Yongtai will hold a 70 per cent stake in Covpress and TIA Group company Treadsetters the remaining 30 per cent.
ECI International is now a wholly-owned subsidiary of Singex-ECI International Pte Ltd following the company’s acquisition by Singex Exhibition Ventures (SEV). According to the companies, the Tyrexpo series of events (including Brityrex in the UK) will continue to be marketed as “An ECI International Event” providing all exhibitors, supporters, partners and visitors with a joint commitment to service excellence. Working closely with ECI founders, Paul Farrant and Rowena Suthers, this will include expansion into new market segments. As a result of the investment SEV reports that it will put its “full resources” to work on the organisation of future Tyrexpo events, to assist them reach their full potential.
Financial analysts will need to form their own opinions when Cooper Tire & Rubber releases its second quarter 2013 financial results on 8 August. The US tyre maker has announced that in light of its pending acquisition – described as a “merger” in a Cooper press release – by India’s Apollo Tyres, the company will not host a financial community conference call. In the absence of this otherwise regular event a press release will be published on the tyre maker’s website, and Cooper says further information will be available in Form 10-Q of the company’s quarterly report.
Representatives of Cooper Tire’s Findlay, Ohio corporate headquarters have confirmed that the company is facing strike action at its Rongcheng, China plant. In answer to Tyres & Accessories questions, a company spokesperson confirmed that as a result the dispute the factory is “in communication with customers…regarding product supply”. No further details of what this means in practice have been released. However T&A has seen once such customer communication, which suggests the strike, which has reportedly been going on for around a month, is resulting in the delay of export shipments.
Following news of industrial opposition to the on-going Apollo/Cooper takeover and even strikes at Cooper Chengshan in China, company representatives have broadly confirmed that there has been disquiet. However, while the local news coverage suggests this has been the case for nearly a month, Apollo representatives did not confirm this detail and report that the deal is very much on-track and indeed entering the end-game of what they referred to as a “compelling strategic transaction”.
Workers at Cooper Chengshan, a joint-venture between Cooper Tire & Rubber Company (USA) and Chengshan Group (China), are reportedly on a strike in protest against Apollo’s proposed acquisition of Cooper. If correct the reports could throw up a fairly significant spanner in the works as the trade union which represents workers at what is deemed to be “the largest, most profitable and fastest-growing factory of the eight” plants that come as part of the Cooper deal, Cooper Chengshan, have expressed their opposition to the deal.
Swiss Finance Corporation has purchased 6.78 million Apollo Tyres shares on the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange of India) for Rs 482.19 million (£5.3 million). This transaction gives the trading institution a 1.34 per cent stake in Apollo. The shares were purchased at an average price of Rs 71. In a separate deal, Swiss Finance then sold 200,000 Apollo Tyres shares on the NSE for a total of Rs 14.8 million, or Rs 74 per share.
Shareholders ‘voted with their feet’ following the announcement that Apollo Tyres would acquire Cooper Tire & Rubber for US$2.5 billion, causing share prices to plummet from Rs 92.60 on 12 June – the day the deal was announced – to a low of Rs 54.60 (£0.61) nine days later. Now, several institutional investors are said to be speaking with the Indian tyre maker in the hope it will reconsider the transaction.
Financial analysts have maintained a “neutral” rating for shares in Cooper Tire & Rubber Company. The report published 4 July by Zack’s Equity Research explained the general reasoning, which follows Apollo Tyre’s agreement to buy the company for US$2.6 billion on 12 June: “We are pleased with its improved 2013-first quarter results and focus on reducing costs together with increased efficiency in each of the plants. However, we are concerned about the increasingly competitive landscape.”
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