FINDLAY, Ohio (Aug. 31, 2009)—China's Chengshan Group has notified Cooper Tire & Rubber Co. it is considering exercising a put option that would require Cooper to buy part of Chengshan's 49-percent share in the companies' Cooper Chengshan (Shandong) Tire Co. Ltd. venture.
Chengshan notified Cooper in early July it was considering this option and that it is awaiting approval from Chinese authorities to go ahead with it, according to Cooper Chairman and CEO Roy Armes, in a conference call with analysts.
Cooper has budgeted a minimum of $62.7 million for the entire 49-percent share, but it appears Chengshan would put forward a 14-percent tranche. Cooper estimates this size holding would cost it $18 million, Mr. Armes said.
In connection with its majority share acquisition of Cooper Chengshan in 2006, Cooper accepted a put option obligating it to buy from Chengshan anytime from Jan. 1, 2009, through Dec. 31, 2011, that firm's minority holding.
Cooper Chengshan's factory in Chengshan has an annual capacity of 9 million units.