FINDLAY, Ohio (Dec. 30, 2013) — Cooper Tire & Rubber Co. has terminated its merger agreement with India's Apollo Tyres Ltd. after six months of disputes and court battles.
The move comes a day before the merger pact's deadline for Apollo to terminate the agreement if the parties have not concluded the negotiated terms satisfactorily.
"It is time to move our business forward," said Cooper Chairman, CEO and President Roy Armes. "While the strategic rationale for a business combination with Apollo is compelling, it is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo, and we have been notified that financing for the transaction is no longer available.
Apollo responded by threatening to pursue "legal remedies for Cooper's detrimental conduct."
Mr. Armes said, "The right thing for Cooper now is to focus on continuing to build our business."
Apollo said it "is disappointed that Cooper has prematurely attempted to terminate our merger agreement. While Cooper's lack of control over its largest subsidiary and inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the last several months, however, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both companies and their shareholders.
"Importantly," the Indian tire maker said, "Apollo has many other compelling growth opportunities around the world that we are continuing to pursue.
"Our business is performing well — as evidenced by the strong top and bottom line results we reported last quarter — and we remain focused on executing our standalone strategic plan to maximize value for Apollo's shareholders. We are confident that Apollo is well-positioned for continued success."
The two tire makers have been embroiled in a court battle in the Delaware Chancery Court, accusing each other of not fulfilling terms of the agreement.
One of the stumbling blocks has been securing financial information from Cooper's joint venture, Cooper Chengshan Tire (CCT) in Rongcheng, China,
Findlay-based Cooper said working on restoring normal relations with CCT will be its first priority before looking at its other options, including other possible merger agreements.
"The issues at CCT were driven by the merger agreement, and with the agreement now terminated, Cooper is working independently to restore normal operations at CCT, including obtaining the information needed for Cooper to resume regular financial reporting as soon as possible," Mr. Armes said.
"Once the situation at CCT is resolved and regular financial reporting has resumed, Cooper will be in a position to address additional options for the deployment of capital targeted at returning value for our stockholders."
Cooper said it will continue to pursue legal claims against Apollo, claiming the agreement's $50 million termination fee against Cooper — if Cooper terminates the agreement — doesn't apply. However, the company said will pursue the $112.5 million termination fee against Apollo along with other damages.