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Business News/ Companies / News/  Cooper asks court to rule on Apollo Tyres buyout by 31 Dec
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Cooper asks court to rule on Apollo Tyres buyout by 31 Dec

Cooper appeals to Delaware's highest court seeking an expedited hearing

A judge ruled on 8 November that all the contract conditions hadn’t been met, and that Cooper wasn’t yet entitled to force Apollo to complete the $2.5 billion buyout. Photo: BloombergPremium
A judge ruled on 8 November that all the contract conditions hadn’t been met, and that Cooper wasn’t yet entitled to force Apollo to complete the $2.5 billion buyout. Photo: Bloomberg

Wilmington, Delaware:Cooper Tire and Rubber Co. asked the Delaware Supreme Court to rule on its delayed $35-a-share takeover by Apollo Tyres Ltd by 31 December.

A judge ruled on 8 November that all the contract conditions hadn’t been met, and that Cooper wasn’t yet entitled to force Apollo to complete the $2.5 billion buyout. Cooper on Wednesday appealed to Delaware’s highest court seeking an expedited hearing.

“If the ruling that Apollo hasn’t materially breached the parties’ agreement is allowed to stand, Apollo will likely seek to terminate its merger," Cooper lawyers said in the filing.

Unless the ruling by Delaware Chancery Court Judge Sam Glasscock III is reversed, it threatens not just this $2.5 billion merger, and the expectation interests of Cooper’s shareholders, but the broader corporate community’s settled expectations regarding the requirement to use ‘reasonable best efforts’ to consummate a merger, the company’s lawyers added.

Talks to complete the largest acquisition by an Indian company in North America soured in October amid opposition from US and Chinese workers. Apollo, based in Gurgaon, sought to cut its price, citing the labour issues. Findlay, Ohio-based Cooper sued on 4 October alleging Apollo officials were suffering from buyer’s remorse and intentionally delaying the transaction’s completion.

China unit

Glasscock concluded last week that Apollo wasn’t dragging its feet in negotiating with US steelworkers and that means the Indian company hadn’t violated the merger agreement as Cooper alleged.

The judge left undecided whether problems at the company’s China unit, which left the tiremaker unable to provide some financial information to Apollo, allowed the Indian company to walk away from the deal. Glasscock allowed Cooper officials to appeal his ruling on the steelworkers’ talks to the Delaware Supreme Court.

Glasscock’s ruling misconstrues the contract between Cooper and Apollo, Cooper said in an emailed statement. The fourth-largest US tiremaker said it will continue to seek to complete the transaction that both parties agreed to.

Apollo executives countered that Cooper’s push to appeal Glasscock’s ruling showed the tiremaker is avoiding responsibility for the situation at its Chinese unit, where workers have stopped making Cooper-brand tires and are barring the parent company’s officials from entering the facilities.

Financial results

Cooper officials have acknowledged that because Chinese managers are no longer putting financial information on the company’s computer system, Cooper may have difficulty providing consolidated third-quarter financial results.

“We do not agree with Cooper that its lack of control over its largest subsidiary was caused by the proposed merger," Apollo officials said in an emailed statement. The company said it looks forward to seeing Cooper’s updated financials when available.

Cooper shares fell 1% to $24.07 in New York trading. Apollo fell 5.8% to 70.20 on BSE. Bloomberg

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Published: 13 Nov 2013, 08:54 AM IST
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