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New Delhi, June 12: Apollo Tyres will acquire US-based Cooper Tire & Rubber Company in an all-cash deal worth Rs 14,500 crore — a buy that will catapult it to the position of the seventh largest tyre manufacturer in the world.
Apollo said the acquisition of Cooper Tire was the largest deal for the automotive sector in India, a record previously held by Tata Motors for its Jaguar-Land Rover buy from Ford Motor Company for about Rs 9,200 crore in 2008.
It is Apollo’s third major acquisition in the last seven years. The two companies had combined sales worth $6.6 billion in 2012.
Cooper Tire & Rubber Company specialises in the design, manufacture, marketing, and sales of passenger car and light truck tyres. The Findlay, Ohio-based company is present in 11 countries.
According to Apollo, under the terms of the agreement, which has been unanimously approved by the boards of directors of both the companies, Cooper stockholders will receive $35 per share in cash.
The transaction represents a 40-per cent premium to Cooper’s 30-day volume-weighted average price, a release from the company stated.
“This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technolo- gical expertise to create a global leader in tyre manufacturing and distribution,” the statement said.
Both the companies together have between them a dozen plants across eight countries, including China, England, India, Mexico, the Netherlands, Serbia, South Africa and the US.
According to Apollo Tyres chairman Onkar S. Kanwar, the acquisition provides the Delhi-based company a major global footprint and a way to help reach its products in developed as well as emerging markets.
“Cooper is one of the most respected names in the tyre industry, with an extensive distribution network and manufacturing infrastructure and a robust presence in North America and China,” he said.
Kanwar is hopeful that the company would be able to make an impact in the US and European markets.
“The combined company will be positioned to address large, established markets, such as the US and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is potential for further growth. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry,” he added.
According to officials at Apollo, the company hopes to finish the requisite paperwork and get the approvals from various authorities as well as clearance by Cooper’s stockholders soon so that it can complete the process by the second half of 2013.
Officials added that after the deal gets completed Cooper would be a privately held company and its common stock would not be traded on the New York Stock Exchange. Both companies did not elaborate on the future management set-up of the company.