New Delhi, Oct. 7: Apollo Tyres’ $2.5-billion deal to acquire US company Cooper Tire has hit another road block. Apollo’s demand for a lower deal value, because of problems related to Cooper’s China operations and concessions to workers’ union, has been rejected by the US company.
According to a complaint filed by Cooper in a US court, Apollo wanted a price renegotiation “far greater than the $2.50 reduction it had earlier proposed, and at one point referencing ‘$8 or $9’ per share”.
According to the original deal announced in June this year, Apollo had agreed to buy Cooper at $35 per share in an all-cash transaction.
The Indian firm accused Cooper of misrepresenting facts about its Chinese operations and also of unwillingness to give financial concessions to worker's union, United Steelworkers (USW), but the US firm asserted that the risks were part of their deal.
In a statement, Apollo said the company and its financing banks, Morgan Stanley, Deutsche Bank, Goldman Sachs and Standard Chartered Bank, were justified under their merger agreement to ask Cooper to provide updated financial statements and guidance “in light of the significant and unanticipated costs that go well beyond those Apollo is obligated to bear under the merger agreement.
“Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much.”
It added: “While Apollo continues to be supportive of Cooper's efforts to establish control over its subsidiary’s operations and to assert Cooper's rights against its JV partner, Apollo cannot be responsible for Cooper's failures to do so.”
When contacted, Cooper Tire & Rubber Company vice-president, communications & public affairs, Anne Roman said: “The situations with the USW and the joint venture partner and union in China are a direct result of the merger agreement, and are risks Apollo assumed under the merger agreement.”
On the price reduction, she said: “Cooper is acting in the best interests of our shareholders, who overwhelmingly approved the pending merger with Apollo for $35 per share. Cooper has not agreed that a reduction in share price is warranted.”