Cooper Tire & Rubber has announced that it has agreed to acquire approximately 11 per cent of the common equity of Kumho Tire. Cooper reports that the acquisition is in connection with a planned initial public offering on the London and Korean stock exchanges. The deal, which is expected to close in the first quarter of 2005, remains subject to a number of government and regulatory approvals.
The new A1 Grand Prix series is set to commence in autumn next year. As the latest edition to the motorsports calendar it is not being viewed as competition to F1 and has managed to position itself in a different sector of single seater racing. Known as the World Cup of Motorsport, A1 differs from the current F1, in that the contenders will represent their home countries and all cars will have the exact same specifications having been built by the same manufacturer. The sport will use 3.4-litre V8 engines, mounted on a Lola chassis and fitted with Cooper tyres.
Founded by Sheikh Maktoum, a member of the ruling family of Dubai, and businessmen Brian Menell and Antonio Teixeira, the FIA sanctioned series will run in motor racing’s traditional ‘off’ season. It is described by the organisers as being unique in the fact that it brings together a sustainable business model with the high speed excitement of motorsport.
Amongst the countries that have secured their place so far are the UK, South Africa, China, Portugal, Pakistan, Lebanon, Australia, Canada and Malaysia. The participants represent more than 80 per cent of the world’s population. And Dubai, Bahrain, Qatar, China, South Africa, Malaysia, Indonesia, Japan and Australia have already been selected to host the first A1 Grand Prix season, and there is still the possibility of a further two events.
There has been much emphasis put on the fact that the sport will provide a patriotic atmosphere between contenders and their supporters, with chairman of the South African team, Tokyo Sexwale, commenting: “ It will create a new patriotic edge to the sport, and add a new dimension to one of the most popular sports in the world. We are proud and pleased that there will be a South African entrant in this exciting global event. We fully subscribe to the need to spread motor racing away from its traditional European and North American roots and into the developing world. Welcome to the world of Motortainment.”
One of the essential elements of the A1 GP is that it needs to be thrilling to watch. The belief that it will be a compelling spectacle for all motorsport fans was strongly endorsed when Sky Sports bought the broadcasting rights for live coverage in the UK, of not only the races, but also the practice and qualifying sessions. Sky Sports managing director Vic Wakeling said: “We have been sold on the concept of a genuine test of driving skills and it has the added attraction of providing us with more international sport throughout the winter months.”
Cooper Tire & Rubber Company (Findlay/Ohio) has completed the sale of its automotive business, Cooper-Standard Automotive, to an entity formed by The Cypress Group and Goldman Sachs Capital Partners for approximately $1.165 billion in cash, subject to certain post-closing adjustments. As previously announced, $30 million of the purchase price will be held by the buyer until the post-closing working capital adjustments can be finalized.
The rating agency Standard & Poor’s (S&P) has warned tyre manufacturers that a break down in margins maybe on the horizon. The advice follows gleaming profits and figures from a number of manufacturers. S&P singles out Continental and Cooper for praise about their cost structures, adding that even the companies it considers to be well organised still risk being stung by raw material costs, which are responsible for 20 to 30 per cent of the turnover. S&P says it is concerned that due to tough competition it could become difficult to pass rising raw material costs on to the customers, and therefore margins would be under threat.
Thomas A Dattilo has been named Industry Executive of the Year by Rubber & Plastics News. Mr Dattilo, who is also chairman of Rubber Manufacturers Association and vice chairman of the Manufacturers Alliance (MAPI), has served as Cooper’s president chairman and CEO since April 2000. According to Rubber & Plastics News, Mr Dattilo has helped the company to grow by nearly 25 per cent. Identifying Dattilo as the first “outsider” to lead the company, Rubber & Plastics News noted that he has provided the company “international experience and a better understanding of outside forces that influence companies in today’s economy.”
”Cooper’s people and customers are what drive the company’s success. My role is to lead an already outstanding organisation to even greater success – greater than what they may realise they can achieve,” explained Dattilo. “I am thrilled and honored to be named to this prestigious honour and gladly share this recognition with the entire Cooper organization.”
Deutsche Bank analysts are reporting that US tyre replacement shipments have “picked up” in November, increasing 6 per cent year over year. This was the first positive year over year comparision since June. The analysts also suggest that Cooper Tire may have slightly under-performed in the market. In spite of this the analysts also report that Cooper is currently proceeding above its –10 per cent volume assumption for the quarter.
Cooper Tire has been given the ‘go-ahead’ to sell four of it Cooper-Standard Automotive plants having reached an agreement with the United Steelworkers of America (USWA) union. As a result an appeal to the US 7th Circuit Court of Appeals will be dismissed.
Previously Cooper had been under an injunction granted on 2 November, by the US District Court in Indiana. This followed a complaint filed by the USWA asserting the right to negotiate new labour agreements with a buyer before a sale of the four union facilities.
Cooper has already announced a definitive agreement to sell Cooper-Standard Automotive for $1.165 billion to an entity formed by The Cypress Group and Goldman Sachs Capital Partners.
“I am pleased that the talks with the Steelworkers have produced an expedited and favorable conclusion,” said Thomas A. Dattilo, Cooper’s chairman, president and CEO.
Mr Dattilo added: “We have continued working toward closing our transaction with the Cypress Group and Goldman Sachs Capital Partners throughout the process of negotiating with the union. This agreement certainly brings us closer to concluding the sale of Cooper-Standard Automotive, without any additional cost to Cooper Tire & Rubber Company. We continue to believe that the transaction will close before the end of the year.”
Exact details of the agreement have not been released. Cooper expects its deal with Cypress/Goldman Sach to be completed by the end of the year.
Cooper Tire and Rubber Company has named Marcus A Hancock as manager of sport utility vehicle/light truck tyre development. His responsibilities include managing and leading the development of new SUV and light truck products for the North American market.
Originally from England, Hancock joined Cooper-Avon Tyre at Melksham, in 1989 as a tyre design and development technical assistant. He has also worked as both a design engineer and a senior design engineer at Cooper-Avon. Mr Hancock has also been a senior development engineer of performance tyres at the Cooper tyre plant in Findlay, Ohio.
Cooper will supply the A1 Grand Prix, a new FIA approved motorsport series, which will begin in September 2005. The three-year agreement requires Cooper to produce slicks and treaded rain tyres for the series championship, which the company describes as “the World Cup of motorsport.”
Cooper has stated that is will immediately appeal to the US Seventh District Circuit Court of Appeals. The announcement follows a US District Court of Indiana ruling granting a preliminary injunction against the sale of four of the company’s 47 Cooper-Standard Automotive facilities. The facilities were due to be sold to an entity formed by The Cypress group.
Financial analysts are reporting that this quarter is likely to be a slow quarter for retailers and tyre manufacturers. According to the Deutsche Bank analysts, tyre shipments were weak in September declining 6 per cent year over year. This is said to have follow a 7 per cent decline in July and a further 1.5 per cent slip in August. As a result, the consultants are predicting that US tyre makers will experience, on average, a 5 per cent drop during the quarter. Industry players are attributing the weakness to weather in Southeastern US and the ever-increasing fuel prices, impacting on car maintenance spending. This analysis means that the bank is lowering is third quarter estimates for both Goodyear and Cooper.
The United Steelworkers of America (USWA) is to be tied up in yet another lawsuit, this time with Cooper Tire & Rubber. A grievance has been filed to delay the sale of the company’s Cooper-Standard Automotive division to the Cypress Group and Goldman Sachs Capital Partners.
Legal action is being taken on behalf of the 1,500 USWA members that work in four of the division’s plants across America.
Cooper Tire & Rubber has announced that it will sell its automotive business, Cooper-Standard Automotive, to an entity formed by The Cypress Group and Goldman Sachs Capital Partners for approximately $1.165 billion in cash. The transaction, which is subject to certain post-closing adjustments, is expected to close in the fourth quarter of 2004.
Cooper-Standard Automotive, which had revenue of approximately $1.6 billion in 2003, is a manufacturer of fluid handling systems, body sealing systems, and active and passive vibration control systems, primarily for automotive original equipment manufacturers.
Thomas Dattilo, chairman, president, and CEO of Cooper Tire & Rubber said: “We are pleased with the transaction terms reached with Cypress and Goldman. We look forward to pursuing growth opportunities in our tyre business. We believe that after the transaction is completed Cooper-Standard Automotive will be well-positioned for continued strong growth under its new ownership.” Proceeds from the sale are expected to be used for debt reduction, further investment in operations and in repurchasing shares.
As a result of the decline in the US tyre market, Deutsche Bank analysts are revising their estimates for tyre manufacturers Goodyear and Cooper. The analysts say they are adjusting their share price estimates for Cooper from $1.85 down to $1.70. Goodyear’s estimates are to be adjusted by a similar amount, from 50 down to 40 cents. According to the analysts, the 1.6 per cent slip in the market during August is a consequence of high fuel prices, which in turn reduces the amount of disposable income available to consumers.
Due to a decline in demand Cooper Tire & Rubber has decided to end production of inner tubes at its Clarksdale, Mississippi, plant by 12 November.
The company has confirmed that most of the facility’s 159 workers will be made redundant. About 30 of the workers are expected to remain at the plant to produce curing bladders and operate the rubber mixing unit, which produces rubber for internal consumption at the company’s other plants.
In an official statement the company explained that employees have been notified of the redundancy and will receive outplacement assistance. Cooper is also said to have notified its customers about the inner tube decision and is provided recommendations for alternative sources.
The phase-out is expected to cost about $9 million (£5 million), which will be needed to cover the write-down of assets and the impacts of severance and other benefits. The company will record a charge of approximately $7 million during the third quarter of 2004 as a result of this decision.
Cooper maintains that the decision supports its strategy to “dedicate resources to those product categories that will help the business grow globally and provide shareholder value.” cma
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