Apollo opposes Cooper's appeal; Cooper responds
By Miles Moore, Senior Washington Reporter
WILMINGTON, Del. (Nov. 15, 2013) — Cooper Tire & Rubber Co. is merely wasting time appealing a Delaware court's decision on its proposed merger with Apollo Tyres Ltd., the Indian tire maker said in a brief opposing Cooper's appeal before the Delaware Supreme Court.
Cooper, however, said it has clear cause for appeal, and accused Apollo of being disingenuous.
Findlay, Ohio-based Cooper filed Nov. 12 with the high court for appeal of a Nov. 8 Delaware Chancery Court decision finding that India's Apollo did not breach the terms of its June 12 merger agreement with Cooper.
"Unless and until that ruling is reversed, it threatens not just this $2.5 billion merger and the expectation interests of Cooper's shareholders, but the broader corporate community's settled expectations regarding the requirement to use 'reasonable best efforts' to consummate a merger," Cooper said.
Apollo responded in opposition to Cooper's appeal Nov. 14.
The remedy Cooper seeks — "specific performance" of the merger agreement, meaning that the court orders the merger to go through without any changes to the original terms — won't be available even if the Supreme Court reverses the Chancery Court, Apollo said.
To maintain the option of "specific performance," Apollo said, Cooper had to issue its third-quarter financial results by Nov. 14, Apollo said. Instead, Cooper filed a noticewith the U.S. Securities and Exchange Commission Nov. 12 saying it would be unable to file its third-quarter 10-Q documents 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.
That mandates a decision by Dec. 31 if Apollo is not to terminate the merger agreement, the tire maker added.
Apollo said it has no intention of terminating the agreement. "Apollo is still seeking to close the merger transaction," it said, "and continues to try to reach accord with the United Steelworkers and to resolve other impediments to closing."
Cooper filed suit in the Chancery Court Oct. 4, arguing that Apollo's request for a cut in the per-share price of Cooper's stock constituted breach of contract. Apollo claimed that several factors made it necessary for Apollo to seek a lower price, such as the labor unrest at Cooper's Chinese subsidiary.
To reach this reporter: [email protected]; 202-662-7211.
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