On October 7th, Cooper Tire & Rubber Company issued a statement regarding the pending merger with Apollo Tyres, in which Cooper makes it plain that it believes that a reduction in share price is unwarranted. The statement, in full, reads as follows:
Cooper Tire & Rubber Company has filed a legal complaint against the company that has agreed to buy it in a friendly takeover, Apollo Tyres. Cooper filed a complaint on 4 October in Delaware Chancery Court asking that “subsidiaries of Apollo Tyres Ltd be required to expeditiously close the pending merger between the two tyre companies in accordance with the terms of the definitive merger agreement”.
Cooper Tire & Rubber has announced that its stockholders voted to approve its pending merger with a wholly-owned subsidiary of India’s Apollo Tyres, with more than 74 per cent of Cooper’s outstanding common shares voted in favor of the transaction. Approximately 78 per cent of Cooper’s outstanding common shares were voted, with more than 48 million shares voted in favor of the merger, representing approximately 96 per cent of Cooper’s voted shares.
Within the next few hours, Cooper Tire & Rubber shareholders will cast their votes in favour or against Apollo Tyres’ bid to acquire the US tyre maker for US$2.5 billion.
Following the rescheduling of the Cooper Chengshan court hearing to an undetermined date, the Chengshan Group sought to have the case moved from China to Hong Kong. However, Bloomberg reports that the Weihai Intermediate People’s Court has decided not to allow this change of venue.
Cooper Tire has shared details of the sales office it has set up in Moscow. Alex Kolkov heads the office as sales manager; he joined Cooper Tire after serving in leadership positions at multinational companies with sales and production facilities in Russia, including Paulig Rus LLC and Sappi.
Both Apollo Tyres and JK Tyre & Industries intend to establish new plants in Asia, and the chairman of the Indonesian Tire Producers Association says both firms are looking at his country as a potential site. Aziz Pane told Indonesia’s Investor Daily “the two investors from India are interested in coming here.” He added that each tyre maker would have to invest between US$300 million and $350 million in order to achieve a suitable economy of scale. He also opined that in order not to operate at a loss, the factories will have to be operated on a three-shift day system.
As well as needing to sort out issues at the Cooper Chengshan plant, Cooper Tire & Rubber and Apollo Tyres now face an additional barrier to acquisition. Last Friday an arbitrator ruled that Cooper cannot sell its Findlay and Texarkana plants in the US until Apollo secures new collective bargaining agreements with the United Steelworkers union and the 2,500 or so unionised workers at the two factories. This agreement is separate from the existing contract the union has with Cooper Tire.
In the latest installment in the on-going Apollo/Cooper merger saga, a Chinese court has postponed a hearing on a case brought against the combination by Chinese manufacturing business Cooper Chengshan.
Taiwan’s Federal Tyre has become the latest tyre manufacturer to sign a sponsorship agreement with Manchester United FC. The three-year agreement, making Federal United’s Official Tyre Partner in Russia and Taiwan was launched at the Interauto Show in Moscow, led by Federal CEO, Jamie Ma.
Shares in Cooper Tire & Rubber fell 3.3 per cent to US$31.50 on Monday 26 August, putting the stock down 6.1 per cent in total this month. According to the Wall Street Journal, this marks a two-month low and comes off the back of investor fears that the decision India’s central banks to review large deals by Indian companies may affect the transaction. Indeed one report emanating from India suggests that Apollo Tyres’ big for Cooper Tire is about to get reviewed in particular.
On 21 August, Apollo Tyres signed a three-year partnership with Manchester United, which sees the company named as the official tyre of the world-famous football team across both the UK and India. Details of the investment associated with the deal have not been released. What we do know is that as well as access to player appearances in both countries the company will be making the most of its association with Man U in online advertising as well as its marketing and point of sale material. In addition, in a development of its ‘go the distance’ philosophy, Apollo Tyres will create football-based play zones in local communities in the UK and India; these will feature recycled rubber and encourage healthy lifestyles among youngsters.
It was announced today that Apollo Tyres is now Manchester United’s Official Tyre Partner in the UK and India. Tyres & Accessories was present at the deal’s signing at the club’s Aon Training Complex in Carrington and will report full details; the basics are that the three-year agreement will, amongst other things, see the two parties participate in a “joint community commitment to encourage healthy lifestyles and develop sporting skills in young people.”
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.
If you would like the latest news from the Chinese tyre industry in Chinese, visit our partner site TyrepressChina.com. Or click below to continue on Tyrepress.
