This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Cooper Tire Calls Off Apollo Tyres Deal

NEW YORK (The Deal) -- Cooper Tire & Rubber (CTB - Get Report) has officially called off its $2.5 billion merger, or $35 per share, with India's Apollo Tyres, the Findlay, Ohio-based tire maker announced Monday, Dec. 30.

The merger ran into trouble not long after it was agreed to in June, primarily over union labor negotiations, but also over financing concerns.

"It is time to move our business forward," said Cooper chairman and CEO Roy Armes in a statement. "While the strategic rationale for a business combination with Apollo is compelling, it is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo and we have been notified that financing for the transaction is no longer available."

Morgan Stanley, Deutsche Bank AG, Goldman Sachs Bank USA and Standard Chartered Bank originally had committed financing to the deal.

Must Read: Blackstone's Almost Warren Buffett-Like Stake in Crocs

There was speculation that Apollo had been trying to reduce the share price on the deal, but Armes denied that was the case during a Monday morning conference call.

"Cooper never received a proposal from Apollo that includes reduced pricing," Armes said.

Earlier in the fall, Cooper filed a complaint in the Delaware Chancery Court claiming that Apollo was trying to stall closing the deal, including reaching an agreement with the United Steelworkers union. The Chancery Court ruled that Apollo hadn't breached the merger agreement, a ruling that was upheld on appeal.

Armes added in Monday's statement that Cooper will do just fine without the Apollo deal, noting that the company had a record operating profit in the first half of the year.

The CEO said the company's attention for now would be on its Cooper Chengshan (Shandong) Tire Co. joint venture in China. Cooper earlier complained that it did not have full access to the facilities in China or the financial information, since workers there went on strike opposing the merger.

"We went into this merger in a strong position and we exit this agreement remaining a strong company," Armes said during the call. He said he was not ruling out the possibility of looking for other acquisitions.

"While Cooper believes Apollo has breached the merger agreement and we will continue to pursue the legal steps necessary to protect the interests of our company and our stockholders, our focus will be squarely on our business and moving it forward," Armes concluded in a statement.

There is still the matter of breakup fees, including one for $50 million and a $112.5 million reverse termination fee. Armes said he didn't think Cooper owed anything, but he would leave it up to a court to decide.

Cooper opened 2.7% lower at $22.32 per share on Monday morning, giving it a market capitalization of about $1.5 billion.

-- Written by Demitri Diakantonis

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CTB $33.68 0.00%
AAPL $114.64 0.00%
FB $94.06 0.00%
GOOG $629.25 0.00%
TSLA $266.28 0.00%

Markets

Chart of I:DJI
DOW 17,550.69 -47.51 -0.27%
S&P 500 2,093.32 -4.72 -0.22%
NASDAQ 5,105.5460 -9.8360 -0.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs