Cooper Tire loses $112 million Apollo deal breakup fee bid
1 min read . Updated: 31 Oct 2014, 10:58 PM IST
PremiumA judge in Delaware state court in Wilmington ruled that Cooper didn't satisfy the closing conditions of the deal
Delaware, Wilmington: Cooper Tire & Rubber Co. lost a bid for a $112 million breakup fee after a judge sided with India-based rival Apollo Tyres Ltd., which claimed a failure to honour terms of a buyout agreement doomed the $2.5 billion sale of the US tiremaker.
Labour strife in the US and opposition to the purchase by Cooper’s Chinese joint-venture partner caused the Findlay, Ohio- based tire company to run afoul of the sale contract and left it unable to close the deal, Apollo lawyers argued in July. Delaware Chancery Court judge Sam Glasscock III on Friday ruled that Cooper didn’t satisfy the closing conditions of the deal.
Cooper fell as much as 16 cents to $31.67 in New York trading after news of the ruling. The shares later rose to $32.15 at 12:45 pm.
The company’s ownership of Chinese affiliate Chengshan Cooper Tires, which seized control of its facility after the merger announcement and wouldn’t release financial records, was “a major obstacle" to consummating the buyout terms, Glasscock wrote.
“Cooper failed to comply" with wording to ensure its subsidiaries operate “in the ordinary course of business," and that failure “is sufficient" to justify rejection of the breakup fee, Glasscock wrote.
Anne Roman, a spokeswoman for Cooper, and Meghan Gavigan, a spokeswoman for Apollo, didn’t immediately respond to requests seeking comments on the ruling. Bloomberg
Jef Feeley and Dawn McCarty in Wilmington, Delaware also contributed to this story.
