Delaware court grants Cooper's motion for expedited review
WILMINGTON, Del. (Nov. 15, 2013) — The Delaware Supreme Court has granted Cooper Tire & Rubber Co.'s motion to expedite proceedings in its lawsuit seeking to hold Apollo Tyres Ltd. to the letter of the companies' June 12 merger agreement.
The high court granted Cooper's motion Nov. 15, three days after the tire maker filed it and a week after Judge Sam Glasscock III of the Delaware Chancery Court issued a partial bench ruling that Apollo had not breached the terms of the June 12 merger agreement by requesting a lower per-share price than the $35 per share originally agreed upon.
In a prepared statement, Cooper said it is "pleased" with the court's action. The court scheduled a hearing on the case in Dover, Del., Dec. 19 at 10:30 a.m.
Cooper also said it "continues to seek the expeditious closing" of the merger with Apollo Tyres.
"The only way this merger can still be consummated — and the benefits of a completed merger provided to Cooper's shareholders — is if Apollo is precluded from terminating the merger agreement on Dec. 31, 2013, as Apollo is likely to do if the ruling...stands," Cooper said in its Nov. 12 motion.
"What is more, this case involves a discrete but critically important legal ruling that threatens not just this $2.5 billion merger and the expectation interests of Cooper's shareholders, but broader settled expectations," Cooper said.
"Can a buyer that is required to use reasonable best efforts to remove an impediment to closing refuse to do so, consistent with that obligation, unless the seller agrees to a price reduction?" the tire maker continued. "Settled precedent holds, 'No.'"
Cooper referred to Apollo's request to lower the per-share price based on Apollo's estimates of how much an agreement with the United Steelworkers union would cost — estimates that Cooper said were unreasonably high.
In a Nov. 14 brief opposing Cooper's motion, Apollo said it had no intention of terminating the agreement Dec. 31.
"Apollo is still seeking to close the merger transaction, and continues to try to reach accord with the USW and to resolve other impediments to closing," the Mumbai, India-based tire maker said.
Cooper's insistence on "specific performance" — i.e. the exact terms of the June 12 agreement — was unrealistic even if the Supreme Court reversed the Chancery Court, according to Apollo.
To maintain the option of specific performance, Apollo said, Cooper had to issue its third-quarter financial results by Nov. 14.
Instead, Cooper filed a notice with the Securities and Exchange Commission Nov. 12 saying it would be unable to file its 10-Q financial documents for the third quarter on time.
"Accordingly, neither Cooper nor Apollo is in a position to compel funding of the transaction financing," Apollo said. "Specific performance is no longer available, and there is no 'good cause' for Cooper to seek expedited review.
However, Cooper said in its Nov. 15 reply to Apollo that specific performance was still possible through alternative financing or a lawsuit to compel the original financing sources to deliver funds.
"Even if specific performance were unavailable, moreover, Apollo ignores the alternative relief requested in Cooper's complaint — a declaratory judgment regarding Apollo's breach," Cooper said. This alone mandates a decision by Dec. 31, it said.
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