Cooper Tire, Apollo Tyres agreement grows strained
- Article by: The Associated Press
- Associated Press
- October 7, 2013 - 4:00 PM
Cooper Tire & Rubber Co. shares plunged Monday as its $2.2 billion deal with Apollo Tyres Ltd. becomes more uncertain.
India's Apollo is seeking a lower price than the original $35 per share it offered Cooper in June because of added costs for union matters. Findlay, Ohio-based Cooper said it does not agree with such a price reduction.
Investors are increasingly concerned that the deal could fall apart. Under the terms of the agreement, if the deal is delayed past Dec. 31 it can be terminated without penalty. If it is completed, the deal would create the seventh-largest tire company in the world.
Shares of Cooper fell nearly 13 percent to $25.81 in afternoon trading. Its stock has traded between $18.38 and $34.79 in the past 52 weeks, peaking in June when the deal was announced.
The deal between Cooper and Apollo had been approved by the boards of both companies and Cooper shareholders.
However, union talks led to a delay and the deal's future has been complicated by escalating conflicts between the companies.
Cooper filed a complaint in a Delaware court on Friday asking that Apollo be required to quickly close on the deal. It accused Apollo of dragging its feet on union talks to either back out of the deal or give it leverage to ask for a lower price. An agreement must be reached with the union for the deal to close.
Apollo said Sunday that it is working to resolve complex union matters and finds Cooper's request to speed matters up unreasonable. Apollo is also seeking a lower price than the original $35 per share because of added costs for union matters.
Cooper said in a regulatory filing that it does not agree that any such reduction is due.
Apollo also argued that Cooper has not provided sufficient information that it needs regarding a Chinese subsidiary. The U.S. company said that it is working to resolve issues with its Chinese partner.
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