FINDLAY — Cooper Tire & Rubber Co. said Tuesday in a filing with the U.S. Securities and Exchange Commission that it will not be able to meet its Thursday deadline to report its third-quarter earnings because of an ongoing dispute at its Chinese joint venture plant, something which could have significant implications on the company’s pending merger with India’s Apollo Tyres Ltd.
In Tuesday’s filing, Cooper Tire said employees of the China plant went on strike shortly after the $2.5 billion sale to Apollo was announced on June 12. The employees returned to work on Aug. 17, but continue to withhold financial information and deny Cooper Tire representatives access to it.
“The company is currently evaluating its options for resolving this matter,” Cooper Tire said in the SEC filing. “Until it obtains satisfactory information from the joint venture, the company will not be able to file the Form 10-Q. The Company expects to file the Form 10-Q as soon as practicable after the information is obtained.”
Public companies have 45 days from the end of a quarter to file their financial results. Cooper Tire’s deadline is Thursday. The company’s stock was down 25 cents, closing at $24.07 Tuesday on the New York Stock Exchange.
Cooper Tire was in court last week arguing that Apollo was dragging its feet and asking a judge to compel Apollo to accept a labor agreement Cooper Tire had negotiated with the United Steelworkers union representing its U.S. employees. The Findlay company requested Apollo be ordered to close the deal under its original terms, including a purchase price of $35 per share.
The judge presiding over the case issued a bench decision that Apollo had not violated the merger agreement. Apollo has been seeking a lower price, citing unexpected costs related to U.S. labor issues and the plant issues in China. A ruling on other issues is pending.
Earlier Tuesday, Cooper Tire said it was appealing the ruling, saying it believes it has met the conditions for closing and that it will continue to work toward closing the transaction.
“Cooper [Tire] will continue to work toward closing the transaction that both parties agreed to on June 12, 2013. Cooper entered into the agreement with Apollo from a position of strength. Our company generated record sales and earnings in 2012 and continued to perform well with record earnings in Q1 and operating profit that was up in the first six months of 2013 compared to the prior year. Our joint venture in China was performing well with no labor or other unrest. We were not looking to be acquired, but our operating performance and growth-oriented strategic plan for the future attracted Apollo to Cooper [Tire],” the company said in a statement.
In response, Apollo said Cooper Tire is trying to avoid its responsibility over the situation in China.
“We do not agree with Cooper that its lack of control over its largest subsidiary was caused by the proposed merger. We remain committed to finding a sensible way forward for all affected stakeholders, including the USW, and look forward to seeing Cooper’s updated financials when available,” Apollo said in a statement.
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