FINDLAY, Ohio (Nov. 12, 2013) — Cooper Tire & Rubber Co. is appealing the partial ruling of a Delaware Chancery Court judge that Apollo Tyres Ltd. did not breach the terms of its merger agreement with Cooper.
In a Nov. 12 statement, Cooper said it will seek a reversal of Judge Sam Glasscock III's ruling in the Delaware Supreme Court.
"Cooper entered into the agreement with Apollo in a position of strength," the Findlay-based tire maker said.
Cooper generated record profits in 2012 and the first quarter of 2013, and operating profit was up in the first six months of 2013, the company said. This was what attracted Apollo to make a bid for Cooper, it said.
"There is one point on which all parties agree—it was the merger agreement itself that caused the issue with our CCT (Chengshan Shandong Tire Co. Ltd.) joint venture in China," Cooper said. "Absent the agreement, CCT would have continued in full operation, performing well and making an important contribution to Cooper's results."
CCT, Cooper's joint venture partner in China, encouraged workers at CCT to go out on strike June 21. While operations have resumed there, the plant no longer makes Cooper-brand tires. Cooper and Apollo differ as to whether Cooper gave Apollo fair warning about the possibility of a CCT strike.
In a letter issued Nov. 9, the day after his bench verdict, Judge Glasscock said Cooper was not entitled to compel Apollo to close the merger, at least as matters stand now.
He noted that Cooper said the ongoing problems at CCT will not allow the company to issue its third-quarter results in a timely fashion.
If Cooper is correct in assuming that its third-quarter results won't be ready by Nov. 14 as scheduled, Judge Glasscock said, then it will not be entitled thereafter to compel the merger, and the court loses jurisdiction over the remaining issues in the case.
But if Cooper does issue its third-quarter financials by Nov. 14, then the case remains alive, the judge said.
Judge Glasscock also said that Apollo must continue to do its reasonable best to enter into an agreement with the United Steelworkers (USW) union to allow the merger to close. Cooper said it was pleased the judge reconfirmed that necessity in his decision.
Cooper and Apollo reached a merger agreement June 12 valued at $2.5 billion, based on an offer of $35 a share for Cooper's stock. Cooper filed the lawsuit against Apollo Oct. 4, after Apollo requested a reduction of at least $2.50 and perhaps as high as $9 a share for Cooper stock.
After Judge Glasscock's decision, Cooper's shares fell 11.5 percent on the New York Stock Exchange. On Nov. 12, however, Apollo reported a 44-percent increase in its net profit in its second quarter.