India
Cooper Tire & Rubber shareholders will vote on the company’s acquisition by Apollo Tyres at a meeting scheduled for 30 September. Cooper stockholders of record as of the close of business 30 August 2013 are entitled to vote at the special meeting, which will take place in the US city of Cleveland.
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.
It appears the strike at the Cooper Chengshan factory in China is over, and the 5,000 workers are back at their jobs and producing tyres. Details of how the strike was resolved are not yet known.
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.”
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.
Incentives to draw in prospective customers are familiar practice for most tyre dealers, but free onions with every car or truck tyre sold? One tyre seller in India has introduced such an offer, but he has more in mind than just selling more tyres.
On 28 May, JK Tyre & Industries poured water on news published by Indian financial daily The Financial Express, stating it had “no firm proposal” to acquire a tyre manufacturer in Southeast Asia for Rs 1.5 billion (£15.7 million) and that it had “not made any commitment whatsoever” to this effect. Yet at the time the company was still committed to investing in the region, specifically in rubber plantations. Now it appears this project has been shelved, or even dropped entirely.
In its financial results for the March to June quarter – the first quarter of its current financial year – JK Tyre posted a net profit of Rs 540.4 million (£5.7 million), a year-on-year increase of 265.9 per cent. Quarter net sales came to Rs 18,669.4 (£196.0 million), 3.3 per cent higher than in the first quarter of 2012.
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.
On 1 August, Andreas Penkert, former CEO and director of Continental India Ltd, the former Modi Tyres operation acquired in 2011, has taken over leadership of sales and marketing for Pirelli in Germany. In his new role Penkert reports to Pirelli Deutschland GmbH CEO Michael Schwöbel and Pirelli tyre S.p.A. Central Europe CEO Daniele Deambrogio.
Pro-Align, UK distributor of the Hunter range, has been awarded ‘Platinum Partner’ status by the wheel servicing equipment manufacturer. This distinction was bestowed at a recent global distributor meeting and given to Pro-Align for its 2012 performance, which saw the UK distributor ranked third place globally, just behind Germany and India.
Apollo Tyres Ltd has reported first quarter 2013-2014 financials including a 19 per cent rise in net profits to 1.66 billion rupees (22.8 million euros; US$29.7 million). The announcement followed the approval of a large dividend pay-out of 50 per cent per share (0.50 per equity share), for the year ended 31 March 2013.
Shareholder response to Apollo Tyres’ acquisition of Cooper Tire & Rubber has been mixed and several institutional investors petitioned the tyre maker in July to reconsider its decision. Apollo’s share price currently hovers around Rs 61, about two thirds the going rate before the company announced the planned purchase. Against this backdrop, company chairman Onkar S Kanwar’s address to shareholders at the Apollo Tyres 2013 annual general meeting framed the US$2.5 billion transaction as a necessary response to changing market conditions.
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