New Delhi, Dec. 17: The Supreme Court of Delaware in a ruling today paved the way for Apollo Tyres to walk away from its $2.5-billion buyout of Cooper Tire & Rubber Co.
The Delaware Supreme Court dismissed Cooper’s appeal against an earlier lower court ruling that Apollo was meeting its obligations to reach new contract terms with the unions at Cooper’s plants in Ohio and Texas.
“We are pleased with the decision of the Delaware Supreme Court today, which did more than dismiss Cooper’s appeal — the court decided the appeal was improvidently granted in the first place,” Apollo Tyres said in a statement.
On November 12, Cooper Tire & Rubber Co had appealed to the Delaware Supreme Court against the partial ruling by the lower court on November 8.
Under the earlier ruling of the Delaware Chancery Court, Cooper and Apollo were required “to continue to perform their obligations under the merger agreement” till December 31 — the date through which the agreement remains in effect.
“Cooper’s litigation strategies to date have done nothing but generate unnecessary cost for its shareholders and for Apollo, and compound the obstacles that Cooper’s situation has created for this merger,” Apollo added in its statement.
Cooper Tire communications & public affairs vice-president Anne Roman said the Delaware Supreme Court today decided not to hear the company’s interlocutory appeal. “Today’s action was not a decision on the merits of the issue on appeal, but instead was a procedural ruling that returns the case to the Delaware Chancery Court,” she said.
Apollo wants to pay less than the $35 per share agreed in June because of demands by unions at Cooper plants and disruptions at Cooper’s venture in China.
The Indian tyre major reiterated that it was committed to the takeover but not at the current price as issues, including those involving Cooper’s US labour union — the United Steel Workers —and its Chinese joint venture, made it difficult to close the financing for the deal.
The deal, which could have been the biggest acquisition in the sector by the Indian tyre company, has been marred by controversy. On June 12, Apollo Tyres had announced that it would acquire Cooper Tire & Rubber Company in an all-cash transaction.
Apollo shares today settled over 2 per cent higher on receiving the news. After surging 8.79 per cent to Rs 92.20 in intra-day trade on the BSE, the scrip finally ended at Rs 86.70, up 2.30 per cent.