ERJ staff report (LMH)
Tire Business staff report
Gurgaon, India — India’s Apollo Tyres Ltd is buying Cooper Tire & Rubber Co. in an all-cash deal valued at $2.5 billion (€1.8 million), or about a 40-percent premium over the 30-day volume-weighted average price of Cooper’s stock.
The combination of the Nos. 16 and 11 tire makers worldwide will create an entity with roughly $6.6 billion in annual sales — good for a No. 7 world ranking — and manufacturing at a dozen plants in eight countries — China, England, India, Mexico, Netherland, Serbia South Africa and the US.
Together the companies are calling this a “strategic combination” of two companies with “highly complementary brands, geographic presence, and technological expertise…”
Cooper Chairman, CEO and President Roy Armes called the deal a “compelling transaction that is in the best interest of Cooper’s stockholders” that offers “attractive benefits to our customers and employees.”
He added, “We have watched Apollo’s successful transformation into a major global tire group, and have a great deal of respect for the company and its leadership.”
Apollo Tyres Chairman Onkar S. Kanwar said the transaction “provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world." He said, "Cooper is one of the most respected names in the tire industry, with an extensive distribution network and manufacturing infrastructure and a particularly robust presence in North America and China."
Cooper and Apollo said they expect to reap pre-tax “value-creation benefits” of approximately $80 million to $120 million per year. These operating profit benefits are expected to be fully achieved after three years and will be derived from operating scale, sourcing benefits, technology, product optimisation, and manufacturing improvements.
Under the terms of the agreement, which was approved unanimously by the boards of directors of both companies, Cooper stockholders will receive $35 per share in cash.
The close of the transaction, assuming timely regulatory approvals and other customary closing conditions, as well as approval by Cooper’s stockholders, is expected to take place within the second half of 2013, the companies said.
Apollo Vice Chairman and Managing Director Neeraj Kanwar, said the combined company’s “extended global reach will create opportunities to provide our customers and distributors around the world with increased access to the quality tires they have come to expect from each of our respective brands.”
The combined entity controls a wide array of brands — Apollo, Cooper, Vredestein, Mastercraft, Changshan, Roadmaster, Starfire and Avon — in the passenger, light and heavy truck, farm and OTR vehicle segments and has a sold presence in the world’s three key markets, North America, Europea and China, Kanwar said.