Findlay, Ohio—Cooper Tire & Rubber Co. is proceeding with the proposed sale of its 65 percent interest in Cooper Chengshan (Shandong) Tire Co. Ltd., its Chinese joint venture with Chengshan Group Co. Ltd., Roy Armes, the firm’s chairman, CEO and president confirmed.
The executive said during a conference call discussing the firm’s third quarter results Cooper will proceed with the transaction in accordance with the process it set forth earlier this year after reviewing the documentation and working with Chengshan in confirming the necessary steps to move forward.
Cooper Tire said it had received notice and related documentation on Chengshan’s intention to purchase the CCT joint venture in an Oct. 8 release.
“China will continue to be an important part of our growth strategy, whether or not we own the joint venture,” Armes said. “Should our joint venture partner complete the transaction and buy our share of CCT, we have offtake rights through mid-2018.”
Cooper’s third quarter 10-Q filing with the Securities and Exchange Commission listed the valuation of the CCT, determined by an independent firm, at about $437.7 million. While Cooper did not specify Chengshan’s exact offer, a 65 percent stake would amount to about $284.5 million.
Brad Hughes—senior vice president, CFO and treasurer, and president of Cooper’s international operations—said that if Cooper sells its interest in CCT, the firm would continue to earn the profits on CCT-produced units that it sells through other Cooper business units, citing Roadmaster tires sold through Cooper U.S. as an example.
However, Cooper would lose the profits that CCT earns on selling tires to other Cooper business units and on any tire sold directly to the customer by CCT, Hughes said.
Hughes said Cooper has not shared specific financial information with regards to the CCT transaction for competitive and legal reasons, but the executive said the firm plans to disclose such specifics at the appropriate time.
Cooper did not provide a projection as to when the CCT transaction would be complete. Hughes said the next step in the process is receiving government and regulatory approval. However, Hughes said there are some limits on the timeline.