To say that June was an interesting month for the tyre industry is something of an understatement. It was explosive – and in at least one case literally so. But the drama of it all offers consumers a challenging life lesson.
With the ink still drying on Apollo Tyre’s agreement to purchase Cooper Tire and Rubber, on 27 June Tyres & Accessories met with Apollo vice chairman and managing director Neeraj Kanwar at the company's new global marketing office in central London in order to get the inside line on the deal, the impending integration and the strategy behind the purchase.
In 2010, Apollo's owners, chairman Onkar Kanwar and vice-chairman and managing director Neeraj Kanwar, told the world that the company was aiming to break into the global top 10…at least. At the time this announcement was made you could be forgiven for thinking such a proclamation was either an exercise in hyperbole or in corporate goal setting. And why not? There's nothing wrong with aiming high, as many of the world's fastest growing tyre companies are clearly doing. After all, as the saying goes, “he who aims at nothing hits it”.
But with all the speculation that surrounded the company's decision to engage in takeover talks with Cooper at the end of 2012, the fact that the deal has now been agreed arguably isn't as much of a surprise as the speed with which the top 10 goal has been attained. Early indications suggest that the amalgamated Apollo/Cooper will be the seventh largest tyre company on earth. So what’s next? The exclusive club that is dominated and fiercely defended by the big five? Or, as is more likely, a period of integration and consolidation while the dust settles?
Cooper Tire has replaced its mid-range Lifeliner GLS in the US with a new model, the CS3 Touring. The new all-season tyre is available in T, H and V speed ratings, and sizes designed for highway and urban driving in today's modern passenger car and crossover vehicles. Cooper says the launch of the CS3 in combination with its current premium CS4 Touring tyre “offers a wide breath of sizes and feature options, giving appropriate choices for each consumer.”
Apollo Tyres joint chairman Neeraj Kanwar has spoken out in support of keeping and even expanding Apollo and Cooper’s existing manufacturing sites. With the dust still settling following the news of the acquisition of Cooper by Apollo, Kanwar’s comments, which came as part of an interview with Tyres & Accessories, appear to act as a further assurance that the company has no plans to close its manufacturing locations.
Cooper Tire & Rubber Co. was reportedly sued by one of its investors in a bid to block the company’s $2.5 billion takeover by Apollo Tyres Ltd., saying the offer of US$35 wasn’t high enough. According to a Bloomberg report, the Booth Family Trust said in a filing at Delaware Chancery Court in Wilmington: “The proposed transaction is the result of an unfair process [and] was negotiated and entered into in bad faith…”.
While Cooper's announcement on Monday that it is to "reintroduce" the Discoverer CTS 4×4 tyre to European markets as part of its product strategy makes sense given the recent development of this segment towards high performance tyres designed for 100 per cent road use. It also posed a few questions about the tyre's history, and whether European drivers should expect different characteristics from markets around the world in which the tyre has been continuously available. Tyrepress.com asked Cooper for a few more details on the newly reintroduced CTS.
Melksham Town Council has welcomed Apollo Tyres’ acquisition of Cooper Tire & Rubber. Melksham north ward councillor Pam Wiltshire told local newspaper the Wiltshire Times that “obviously it’s a really good thing for the town, because there have been concerns in the past with what might happen.”
Cooper Tire Europe has announced an extended 4×4 tyre offering within Europe, reintroducing the Discoverer CTS, and adding new sizes to many other products in the range. Europe MD Jeff Schumaker said the company is “delighted to offer Cooper’s complete range of 4×4 tyres in Europe, giving our customers the best possible choice, whatever their preference for off or on-road driving.” As well as the addition of the CTS, Cooper now offers a wider range of fitments in some of its most popular 4×4 tyres, including the Discoverer A/T3, S/T, STT, H/T, S/T MAXX and S/T2 ranges.
Although there are still some three months until the opening of the 11th China International Tire Expo, the show’s organiser says the number of stands booked and floorspace have already set a new record. According to Wilko Fong, managing director of Reliable International Exhibition Services, he expects more than 320 exhibitors at CITExpo 2013 to occupy 24,000 square metres of exhibition space in the three halls of the Shanghai Everbright Convention and Exhibition Center.
Although no comment has come from Clermont-Ferrand, within the last week Michelin has again been named as a future Pirelli replacement as Formula One tyre supplier. But Bernie Ecclestone has been quick to put the lid on such speculation; in his F1 blog, motor racing journalist Adam Cooper writes that when questioned on the subject, Ecclestone responded: “No idea. I haven’t got a clue. I haven’t spoken to anyone. We have a long-term contract with Pirelli, as the FIA do. And I think most of the teams have – I think they’ve done a deal with all the teams they want to do a deal with.”
Shares in Cooper Tire & Rubber have fared well since news of the tyre maker’s impending acquisition was announced. When the NYSE closed on 13 June the share price stood at US$33.80, an increase of some 38 per cent on the start of the week. Future owner Apollo Tyres has not enjoyed such a positive reaction to the news, however. By midday on 14 June (Indian standard time), shares in Apollo Tyres were trading at Rs 67.75, down more than 26 per cent since the deal was made public.
Shares in Apollo Tyres Ltd plunged by up to 21 per cent the day the company announced its purchase of Cooper Tire. According to local news sources, it has been over 20 years since the share price fell this much. The negative sentiment is likely to related to the price Apollo has agreed to pay for Cooper, which at $35 a share, is far higher than the company’s 11 June closing price of $24.56 and potential price tags of around $25 that were mooted around the time rumours of the deal emerged in October 2012.
In premarket trading on 12 June, shares in Cooper Tire & Rubber Co. surged 40.3 per cent to US$34.45 per share following news of Apollo Tyres Ltd’s agreement to acquire the company for around $2.5 billion, or $35.00 a share, in cash. Shares in rival tyre maker Goodyear Tire & Rubber Co. also rose six per cent following the Apollo/Cooper deal’s announcement.
In February, Cooper Tire & Rubber Company and Mexican firm Industrias Negromex S.A. de C.V. (INSA) jointly earned a US patent (8,357,733) for a process to produce silane, hydrophobated silica, silica masterbatch and rubber products. Building on this announcement, on 7 June the two companies reported achieving a further significant milestone. They have successfully evaluated silica masterbatch technology in full-scale production facilities and demonstrated that tyres produced with silica masterbatch technology offer a range of benefits compared with tyres produced using conventional dry silica mixing technology.
Kumho is promoting its ECSTA LE Sport KU39, an asymmetric ultra high performance tyre designed, as a product designed for Europe’s top car marques. According to the company, it was developed using the company’s KADAS prediction tools and on Europe’s most demanding test tracks. The Y speed rated product’s key selling points are said to be its enhanced performance, braking in wet conditions and controlled ride and refinement. Its high grip tread compound ensures maximum traction and braking performance, while its specially designed casing provides impressive high speed stability.
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