Apollo moves closer to $2.5 billion Cooper deal; hurdles remain

By Aradhana Aravindan

REUTERS - Cooper Tire and Rubber Co shareholders have approved the U.S. company's $2.5 billion sale to Apollo Tyres , clearing a major step for the creation of the world's seventh biggest tyre maker.

Completion of the deal faces likely delays, however, due to opposition from workers at Cooper's joint venture in China and U.S. labour issues. Still, the two companies say they expect to close the deal by year-end.

If the takeover is completed, the deal will be the second-largest U.S. acquisition by an Indian company and one of the top 10 outbound takeovers from Asia's third-largest economy, according to Thomson Reuters data.

Apollo hopes to gain a foothold in the world's two biggest auto markets, China and the United States, by buying Cooper. Cooper has plants in locations including the United States, Serbia and China.

Cooper Chairman and Chief Executive Roy Armes said in a statement the deal would create a "$6.6 billion leader in the tyre industry with a strong global footprint".

Workers at Cooper's China joint venture, Cooper Chengshan Tire Co in China's eastern Shandong province, have been striking against the deal for about three months, while its local partner has filed a lawsuit seeking to dissolve the business pact.

Separately, a U.S arbitrator ruled Cooper could not sell two of its factories in the country until a collective bargaining agreement was reached between Apollo and members of the plants' union.

"Closing will require agreement with the United Steelworkers and we are working constructively to reach that goal while preserving the benefits of the original agreement," Apollo said in a statement after getting Cooper shareholder approval on Monday.

It said it has made "significant assurances" regarding the workers at the Cooper Chengshan plant, including assurances on jobs and on continued investment.

"Apollo hopes that Cooper will be able to resolve remaining economic issues with Cooper's JV partner led by Chairman Che (of Chengshan)," it added.

DEBT WORRIES

Shareholders stand to receive $35 per Cooper share, a premium of more than 40 percent to its price before the acquisition announcement on June 12. Cooper shares rose 3.5 percent to a high of $31.44 after the shareholder meeting on Monday, before closing at $30.80.

Apollo, whose shares have lost a quarter of their value since the deal was announced, dropped as much as 9 percent on Tuesday morning in a positive Mumbai market, as the approval re-ignited debt worries.

Cooper shares have slipped since rising close to the offer price as roadblocks to the acquisition emerged due to worries over the debt burden of the new owner.

"You're putting pressure on the company by the amount of debt that they want to use to buy this and so I think the market will always be skittish in the situation," said Chris DeMuth Jr, portfolio manager at U.S.-based Rangeley Capital. Rangeley Capital owns less than 5 percent in Cooper, he said.

Apollo plans to fund the acquisition entirely through debt, most of which will be raised through Cooper, whose market value is currently nearly four times that of the Indian company. (Additional reporting by Mridhula Raghavan in BANGALORE and Sumeet Chatterjee in MUMBAI; Editing by Stephen Coates and Jeremy Laurence)

Matches

MORE TOP STORIES TODAY

Duminy steals first win for Delhi

Duminy steals first win for Delhi

Furious fifties by Duminy and Dinesh Karthik end a long losing streak for the Daredevils. More »

AB, Parthiv seal Bangalore's second win

AB, Parthiv seal Bangalore's second win

Royal Challengers overcame a stutter to cruise to the small target they were set by Mumbai Indians. More »

Glenn Maxwell carves his parallel universe

Glenn Maxwell carves his parallel universe

Glenn Maxwell seems to project an icy disdain when at the crease. Match situations rarely faze him and the bubble in which he plays excludes everyone … More »

Srinivasan can attend BCCI meeting

Srinivasan can attend BCCI meeting

His status as president of TNCA makes him eligible to attend the Working Committee meeting on Sunday. More »

No way back for Pietersen: ECB

No way back for Pietersen: ECB

Kevin Pietersen's hopes of reviving his international career appeared to end Saturday when ECB managing director Paul Downton said there was 'no way back'… More »

[REWIND] The world record that nearly wasn't

[REWIND] The world record that nearly wasn't

Twenty years ago this week, Brian Lara became Test cricket's highest scorer, but he almost didn't make it. More »

Moores gets second stint as England coach

Moores gets second stint as England coach

In a two-year spell from 2007 to 2009, the 51-year-old Moores led England in seven Test series. More »

Bangladesh senior players to see shrink

Bangladesh senior players to see shrink

Bangladesh's senior players will have three sessions with a psychological skill development coach later this month More »

BCCI is not anybody’s property — Dalmiya

BCCI is not anybody’s property — Dalmiya

Dalmiya feels that Srinivasan’s ‘power hungry’ attitude isn’t helping matters. More »

KP ridicules idea of day-night Tests

KP ridicules idea of day-night Tests

Kevin Pietersen has ridiculed the idea of day-night Test cricket, saying the game would be so different to proper Test cricket that we will need a whole… More »

Rajasthan edge low-scoring thriller

Rajasthan edge low-scoring thriller

The bowlers restricted Hyderabad to 133 for 6 before Rahane and Binny took Rajasthan over the line. More »

Tough for bowlers: Saeed Ajmal

Tough for bowlers: Saeed Ajmal

The 36-year-old believes the T20 format and rule changes in 50-over matches have made a real difference. More »

Maxwell blitz takes Punjab home

Maxwell blitz takes Punjab home

The Kings XI batsman blasted a 43-ball 95 to help his team pull off a massive chase against Chennai Super Kings. More »

BCCI members want independent probe

BCCI members want independent probe

The board members are realising after the Supreme Court's observations that something has to be done — IS Bindra More »

'BCCI lacks leaders to take on Srini'

'BCCI lacks leaders to take on Srini'

Two former BCCI presidents, Shashank Manohar and Jagmohan Dalmiya, have reacted strongly to the news of the BCCI calling an emergent meeting on Sunday… More »

Delhi look for first points against confident Kolkata

Delhi look for first points against confident Kolkata

Preview — The threat of Sunil Narine looms large again. More »

Bangalore vs Mumbai: A battle of the big-hitters

Bangalore vs Mumbai: A battle of the big-hitters

Preview — Given the firepower in both line-ups, Dubai crowd may see another high-scorer More »

Yuvraj tees off to Sharjah's delight

Yuvraj tees off to Sharjah's delight

Yuvraj Singh was hardly convincing to begin with against Delhi, but a big dose of crowd support and a helping of poor bowling meant he had the opportunity… More »

Stressed Trott stands down again

Stressed Trott stands down again

The England and Wales Cricket Board (ECB) on Friday confirmed that batsman Jonathan Trott is to take another break from all cricket with immediate eff… More »

PCB starts another coach hunt

PCB starts another coach hunt

The PCB has decided to not extend the contracts of head coach Moin Khan, fielding coach Shoaib Mohammad and batting consultant Zaheer Abbas, and has invited… More »

Fiery star Stokes bids to curb his temper

Fiery star Stokes bids to curb his temper

England all-rounder Ben Stokes admits he must keep his anger under control if he is to end his international exile. More »

Bangalore's arsenal blazes to victory

Bangalore's arsenal blazes to victory

Yuvraj Singh was back to his best in his first match for Royal Challengers Bangalore. More »

Pakistan cricketers face probe

Pakistan cricketers face probe

Pakistani cricket authorities have launched an investigation after a number of current international stars played in exhibition matches in the United States… More »

BCCI to meet before next court hearing

BCCI to meet before next court hearing

The BCCI will hold an emergent working committee meeting on April 20 to discuss the future course of action with regard to the Supreme Court hearing concerning… More »