Apollo targeted Cooper in failed 2013 acquisition bid

FINDLAY, Ohio — Sometimes one's first marriage proposal doesn't always work out. Such was the case with Cooper Tire & Rubber Co.'s previous suitor, Apollo Tyres Ltd., which proposed a $2.5 billion merger of the two companies in June 2013, until Cooper terminated the agreement six months later.

Cooper had said it was courting at least one other interested unnamed suitor up until June 11, 2013, the day its board of directors accepted Apollo's buyout offer of $35 a share.

Apollo's interest in merging with or buying Cooper dated back at least to mid-2011, and throughout the 10 months prior to accepting Apollo's offer, Cooper said it had approached and/or held discussions with as many as 10 possible other suitors (including Taiwan's Kenda Rubber Industrial Co. Ltd. and two other unnamed tire makers) to gauge their interest level.

At the time, the proposed merger of Apollo (the 16th largest tire maker) and Cooper (11th largest) would have created an entity with roughly $6.6 billion in annual sales — good for a No. 7 world ranking at the time — and manufacturing at 14 plants in eight countries.

The companies touted the deal as combining complementary brands, geographic presence and technological expertise.

But some industry analysts viewed the acquisition as "overambitious" and "risky," based on the amount of debt Apollo would incur. Shareholders apparently agreed as Apollo's shares dropped 25% the day the deal was announced.

Then in August 2013, more than 5,000 workers at Cooper Tire's joint venture plant in Rongcheng, China, went on strike to protest the Apollo takeover. At the time, Cooper owned 65% of the venture with China's Chengshan Group.

According to reports, union leaders at the plant were trying to block the transaction from taking place because they didn't believe Apollo could repay the debt it would take on to finance the acquisition, and in turn that could put the workers' jobs in jeopardy.

In October 2013 the two tire makers became embroiled in a court battle in the Delaware Chancery Court, accusing each other of not fulfilling terms of the agreement.

Cooper accused Apollo of attempting to renegotiate the firms' merger pact by "seeking to delay an agreement" with United Steelworkers (USW) union locals at Cooper plants in Texarkana, Ark., and Findlay, as ordered by an arbitrator, after the USW sought arbitration, claiming Cooper's planned sale violated successorship provisions of the union's contracts with Cooper.

Apollo countered that arbitrating the contracts would involve making "material concessions" to the USW that would necessitate the need for financing or financial concessions in the terms of the deal with Cooper, and that Cooper "misrepresented its management and control" of the Cooper Chengshan (Shandong) Tire Co. Ltd. subsidiary in China.

Apollo claimed Cooper's inability to access the facilities of its Chinese subsidiary, to determine what products the subsidiary was producing, to track or control how its funds were being spent or even to access operating or financial information, went beyond any typical work stoppage.

After months of disputes and court battles, Cooper terminated its merger agreement in December 2013, a day before the merger pact's deadline for Apollo to terminate the agreement if the parties had not concluded the negotiated terms satisfactorily.