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Published: Saturday, 8/3/2013 - Updated: 1 year ago

Firm in India is on track to buy Cooper by year’s end

Apollo Tyres clears U.S. anti-trust hurdles

BY TYREL LINKHORN
BLADE BUSINESS WRITER

The pending acquisition of Cooper Tire & Rubber Co. has cleared one regulatory step and is on track to be completed by the end of the year, the company said Friday.

Apollo Tyres Ltd, one of India’s biggest tire companies, announced in June that it would purchase Cooper in an all-cash deal worth $2.4 billion. The deal would be one of the largest acquisitions of an American enterprise by an Indian company to date.

Friday, the two companies announced they had cleared the Hart-Scott-Rodino Act review period with no action by the Federal Trade Commission or the Department of Justice.

The Hart-Scott-Rodino Act deals with anti-trust issues relating to high-value mergers and acquisitions, said Elizabeth McCuskey, a law professor at the University of Toledo.

“They’ve cleared the anti-trust hurdles and can proceed with the acquisition,” Ms. McCuskey said.

The two companies’ joint statement said subject to the remaining customary closing conditions, the deal should be done by the end of the year.

Cooper’s shareholders must still approve the deal. A Cooper spokesman said Friday that no date for that meeting has been set.

Headquartered in Findlay, Cooper is the fourth-largest tire manufacturer in the United States. The company employs 13,000 people worldwide, including about 1,000 at a tire plant next to its corporate offices in Findlay. The company’s other U.S. plants are in Clarksdale, Miss., Tupelo, Miss., and Texarkana, Ark.

Cooper also has manufacturing operations in England, Serbia, Mexico, and China.

Workers at one of those plants are reportedly striking over the pending purchase by Apollo.

On Friday, company spokesman Anne Roman confirmed what she called a “temporary work stoppage” at the company’s plant in Rongcheng, China.

“The company is continuing to work toward getting the plant operating again as soon as possible,” she said in an email. “This issue is not expected to have an impact on the pending merger.”

Ms. Roman said all other Cooper facilities, including others in China, are operating as normal.

“The pending merger will benefit all of Cooper — including those at the Rongcheng plant — as it will bring together two companies with highly complementary brands, geographic presence, and technological expertise,” Ms. Roman said.

Though the merger agreement wasn’t approved by Cooper’s board until June 11 and announced publicly June 12, documents filed with the U.S. Securities and Exchange Commission show Apollo had been interested in acquiring Cooper for some time.

Documents show Apollo’s leadership had approached Cooper several times over the last few years to discuss potential joint ventures, equity investments, and possible mergers. No formal proposals came of the discussions, however.

Then, on Aug. 11, 2012, Apollo proposed to acquire all outstanding shares of Cooper’s stock for $22.75 per share. The day before the offer, shares of Cooper’s stock had closed at $19.29, making the offer a premium of about 18 percent.

Cooper’s Chief Executive, Roy Armes, told Apollo representatives the offer was too low, and not in the best interests of Cooper’s shareholders. He also said the company was not for sale.

Apollo upped its offer to as much as $26 per share in September, 2012, but was again told the offer was too low and the company wasn’t for sale.

Cooper received another unsolicited offer from an unspecified suitor in November, 2012, in the range of $26 to $28 per share, but the company declined the offer. Over the next few months Cooper received other acquisition offers from at least two other parties, but none were found satisfactory.

Apollo ultimately upped its offer to $35 per share in early April and a final agreement was hammered out.

When the deal was announced publicly, it represented a 43 percent premium over where Cooper’s shares closed the previous day and a 25 percent premium over Cooper’s highest share price in the last decade.

Contact Tyrel Linkhorn at tlinkhorn@theblade.com or 419-724-6134.



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