Findlay, Ohio-based Cooper Tire & Rubber Co. recently terminated its $2.3 billion merger agreement with Apollo Tyres, which is based in Guragon, India.
Cooper Tire attributes the termination to Apollo’s breach of the merger agreement, and plans to pursue the legal steps necessary to protect the interest of its company and stockholders, according to Cooper Tire. The announcement of the deal’s termination came just 48 hours before the deadline the companies had set to complete the transaction, according to the International Business Times.
“It is time to move our business forward,” said Roy Armes, Cooper chairman, CEO and president. “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. The right thing for Cooper now is to focus on continuing to build our business.”
Apollo, which expressed its disappointment over Cooper’s actions to terminate the merger, had faced several obstacles from the beginning, including labor disputes and lawsuits, according to the International Business Times. Apollo blamed Cooper Tire for not submitting a complete picture of the working of Chengshan Group, the U.S. tire maker’s joint venture in Rongcheng, China, according to the news publication.
“Apollo is disappointed that Cooper has prematurely attempted to terminate our merger agreement,” Apollo Tyres wrote in a statement. “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. 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.”
Chengshan Group opposed the merger plan with Apollo and had sued its American partner, seeking to dissolve the partnership. At the same time, Apollo also faced labor challenges at Cooper’s U.S. unit, where it failed to reach a contractual agreement with labor unions, according to International Business Times.
Apollo claimed that the labor issues and a lack of cooperation from Cooper regarding its Cooper Chengshan Tire unit (CCT) in Rongcheng made it difficult for the Indian company to raise the funds needed for the acquisition, while Cooper argued that both issues have roots in the merger deal, the International Business Times reported.
Armes noted that addressing the situation at CCT is the company’s top priority.
“The issues at CCT were driven by the merger agreement, and with the agreement now terminated, Cooper is working independently to restore normal operations at CCT, including obtaining the information needed for Cooper to resume regular financial reporting as soon as possible,” Armes said. “Once the situation at CCT is resolved and regular financial reporting has resumed, Cooper will be in a position to address additional options for the deployment of capital targeted at returning value for our stockholders.”