By Bruce Davis, Tire Business staff
DOVER, Del. (Dec. 23, 2013) – Cooper Tire & Rubber Co. appears ready to shift its legal wrangling over terms of its takeover/merger agreement with India's Apollo Tyres Ltd. to an action to recover damages incurred throughout the protracted negotiation process.
Cooper said in a Dec. 20 filing with Delaware Court of Chancery that it "intends to pursue this case as an action for damages," and that it intended to approach the court after Jan. 1 regarding scheduling of hearings to that effect.
Cooper did not say whether this course of action means it's giving up on the prospect of completing the deal, which the companies announced publicly June 12.
The two sides have not ruled out reaching a compromise deal before Dec. 31, although Cooper asked Chancery Court Judge Sam Glasscock in its Dec. 20 letter that "…all motions should be taken off calendar until a status conference can be held in January where the parties and the court can discuss next steps and an appropriate schedule."
In the letter Cooper notes that "…absent any exigent circumstances, there is no need for expedited briefing or a Christmas Eve hearing…."
Apollo did not respond to Tire Business queries for comment.
Mr. Glasscock has asked for an update by Jan. 10 on the status of the deal, which has reached an impasse amidst a series of charges and countercharges by the parties.
Cooper's intentions, contained in a letter to Mr. Glasscock, came amidst a series of filings by Cooper and Apollo on Dec. 19 and 20 regarding the status of a $112.5 million letter of credit that covers the potential break-up fee.
Apollo had filed a complaint asking the court to intervene, an action that prompted a response from Cooper that it had no intention to do so. Thereafter Apollo withdrew its motion.
Should Apollo opt to back out of the proposed takeover, it would face a "reverse buyout" penalty of $112.5 million, according to Cooper documents. However, if the deal drags out to Dec. 31 without resolution, the parties can walk away from the deal, provided neither has "materially breached" the agreement
This latest series of filings came three days after the Delaware Supreme Court reversed itself on an appeal by Cooper Tire of an earlier ruling by the Chancery Court and sent the case back to Chancery Court
The Supreme Court had been scheduled to hear arguments on the matter on Dec. 19, but instead now ruled that its granting of Cooper's appeal on Nov. 15 was "improvidently accepted"—that is, the court recognized it made a mistake in granting the appeal in the first place.
Cooper's action was meant to "expedite" completion of the $2.5 billion acquisition/merger deal by Apollo.
In the letter Cooper notes there is "…no need for expedited briefing or a Christmas Eve hearing…."
The letter was submitted by Stephen C. Norman of Potter, Anderson, Coroon L.L.P. of Wilmington, Del., on behalf of Cooper.