Loading…
Thursday, July 31, 2014
Current Weather
Loading Current Weather....
Published: Tuesday, 10/15/2013 - Updated: 9 months ago

Apollo denies it has ‘buyer’s remorse’ case

Cooper Tire, purchaser spar as delays threaten $2.5B deal

BY TYREL LINKHORN
BLADE BUSINESS WRITER
Apollo Tyres claims Cooper Tire & Rubber Co. is pressuring union officials to wring more concessions from the Indian firm. Cooper accuses Apollo of delaying reaching a deal with the United Steelworkers. The two firms have taken to the courts in an attempt to blame each other for the delays. Apollo Tyres claims Cooper Tire & Rubber Co. is pressuring union officials to wring more concessions from the Indian firm. Cooper accuses Apollo of delaying reaching a deal with the United Steelworkers. The two firms have taken to the courts in an attempt to blame each other for the delays.
ASSOCIATED PRESS Enlarge

FINDLAY — Apollo Tyres Ltd. has fired back at Cooper Tire & Rubber Co.’s allegations that the Indian company is intentionally trying to stall a pending deal between the two firms, filing a counterclaim that argues Cooper is trying to divert attention from its own failures in the now-shaky merger.

“This is not a case of buyer’s remorse,” Apollo said in a filing that was made public on Tuesday.

Apollo, India’s largest tire manufacturer, agreed in June to purchase Findlay-based Cooper for $35 per share. The $2.5 billion deal has cleared U.S. regulatory approval and been OK’d by both companies’ boards of directors and Cooper’s shareholders.

Both companies remain adamant they want the deal to go through, but that looks as questionable as ever as the two firms have taken to the courts in an attempt to blame each other for delays. The deal was scheduled to close Oct. 4.

If either company backs out of the deal now, it could be costly.

Cooper faces a termination fee of $50 million, while Apollo faces a $112.5 million termination fee.

In Cooper’s complaint, filed Oct. 4, the company said Apollo, suffering from “buyer’s remorse” was delaying reaching a deal with the United Steelworkers union — a condition an arbitrator has ruled must be met to close the deal.

Cooper asked the court to compel Apollo to take action so the deal can close.

In a response filed Monday, Apollo denied Cooper’s allegations and filed a counterclaim, seeking a judgment that Cooper has broken the merger agreement.

Apollo’s complaint includes allegations that Cooper representatives have been working back channels by trying to encourage United Steelworkers officials to seek greater concessions from Apollo than the company is willing to provide.

“As a result, the USW has been fortified in negotiations, making Apollo’s position increasingly difficult,” the claim said.

Still, Apollo said it continues negotiating in good faith with the union and has been “willing to make a number of important concessions.”

An email sent Tuesday to a USW spokesman in Pittsburgh was not returned.

A spokesman for Cooper declined to comment.

Apollo also said in its filing that Cooper had violated the merger agreement because it does not have control of a Chinese subsidiary that operates under a joint venture there.

Cooper’s presence in China was part of what made the company so appealing to Apollo, but workers there went on strike after the deal was announced.

Though they are back to work, Cooper officials have been locked out of the plant and don’t have access to certain financial records.

Cooper has disputed the situation is a breach of the agreement.

Even though Cooper is the majority owner in the joint venture, it likely has limited avenues to fix the problem.

“The term ‘joint venture’ in China is an oxymoron,” said Paul Zito, vice president of international development for the Regional Growth Partnership. “It has been and is very one-sided. However, I know the Chinese government and Chinese businesses are working to make it a more even situation.”

Mr. Zito, who is not involved in the negotiations between Cooper and Apollo, also said it’s possible that some nationalistic forces are in play at the Chinese plant.

“Relations between China and India are very tense, which could explain quite a lot of it,” he said.

Shares of Cooper Tire & Rubber closed at $25.88 Tuesday, up 8 cents per share on a day where stocks as a whole swooned on worries about ongoing U.S. debt negotiations.

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



Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. If a comment violates these standards or our privacy statement or visitor's agreement, click the "X" in the upper right corner of the comment box to report abuse. To post comments, you must be a Facebook member. To find out more, please visit the FAQ.

Related stories