Apollo and Cooper clash over $2.5 billion price in tire deal setback
ERJ staff report (BC)
Mumbai – India's Apollo Tyres and Cooper Tire & Rubber Co are at odds over whether Apollo can reduce the price for its proposed takeover of the US firm, Aradhana Aravindan reported for Reuters.
Apollo agreed to buy Cooper in June for about $2.5 billion (€1.8 billion), a transaction that would turn the Indian company into the world's seventh-largest tire maker and give it access to US and China markets. The deal would also be the second-largest US acquisition by an Indian company, according to the Reuters report.
Under the initial agreement in June, Cooper shareholders stand to receive $35 (€25.80) per Cooper share, a premium of more than 40 percent to its price at the time.
Apollo Tyres has now sought to reduce the price it would pay to buy Cooper by more than $2.50 (€1.84) per share, the US company said in a filing to the US Securities and Exchange Commission on Monday.
Cooper said in the filing that on 3 October, Apollo representatives informed the company that it wanted a price renegotiation "this time suggesting a price reduction far greater than the $2.50 (€1.84) reduction it had earlier proposed, and at one point referencing '$8 or $9' (€6-6.6)per share."
Apollo declined to comment on the Cooper filing.
Shares in Apollo, which have lost about 25 percent since the deal was announced, gained as much as 7 percent on 7 October.
The disagreement over price came to light after Cooper on Friday filed a complaint in a US court to force Apollo to close the acquisition "expeditiously."
Apollo said on Sunday that it might face significant costs that were well beyond those it anticipated under the initial merger agreement. These relate to labour issues in the United States and in China, where workers at Cooper's joint venture have been on strike for three months in opposition to the deal.
This is an external link and should open in a new window. If the window does not appear, please check your pop-up blocking software. ERJ is not responsible for the content of external sites.
Full story from Reuters