30 December 2013 15:46 [Source: ICIS news]
HOUSTON (ICIS)--US producer Cooper Tire has terminated its agreement with India-based Apollo Tyres after months-long contentious battle over their previously agreed-to merger, Cooper announced on Monday.
Financing for the $2.5bn (€1.8bn) deal is no longer available, and Apollo will not consummate the deal despite “compelling” reasons to combine the businesses, said Cooper CEO Roy Armes.
“It is time to move our business forward,” Armes said.
In a statement, Apollo expressed disappointment “that Cooper has prematurely attempted to terminate” the merger agreement.
“While Cooper’s lack of control over its largest subsidiary and inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the last several months,” Apollo said. “However, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both companies and their shareholders.
“Cooper's actions leave Apollo no choice but to pursue legal remedies for Cooper's detrimental conduct,” the company added.
Cooper stockholders approved the tyre manufacturer’s merger with Apollo in September after a deal was reached in June. The deal was agreed to be an all-cash transaction, with Cooper stockholders receiving $35/share in cash, a 40% premium to Cooper’s 30-day volume-weighted average price.
But Cooper argued that Apollo has breached the acquisition contract by working for a lower per-share price based on situations with contract negotiations with United Steelworkers in the US as well as a strike involving a Cooper joint venture in China with Chengshan Group.
Apollo disputed the allegations and said it that it had worked with United Steelworkers to enable Cooper to overcome an injunction prohibiting Cooper from consummating the merger.
The Indian company said that Cooper failed to provide required information under the merger agreement due in part to its lack of control of the Chengshan joint venture and had breached other parts of the agreed-to deal. Apollo sought to lower the price tag of the merger as a result.
The deal was taken to court in the US state of Delaware, where a judge ruled that Apollo had not breached its obligations. Cooper’s appeal of the decision was dismissed, and the case returned to a lower court.
Had the merger been consummated, the combination would have resulted in the world’s seventh-largest tyre manufacturer.
($1 = €0.73)
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