Apollo Tyres asks US court to declare Cooper Tire deal conditions not met

Written by PTI | New Delhi | Updated: Oct 16 2013, 05:03am hrs
Apollo TyresApollo said it filed its reply and the counterclaim.
Apollo Tyres has asked a US court to declare that conditions precedent to closing the USD 2.5 billion merger with Cooper Tire & Rubber Company have not been satisfied.

The Indian company, responding to a complaint filed by Cooper Tire with the Delaware Court of Chancery on October 4, also denied allegations that it sought to delay an agreement with United Steelworkers (USW), which represents Cooper employees at facilities in Ohio and Arkansas.

"Apollo also filed a counterclaim seeking a declaratory judgement that the conditions precedent to the closing of the merger have not been satisfied," the company said in a statement today.

Apollo said it filed its reply and the counterclaim yesterday.

The response detailed Cooper's failures to provide information required under the merger agreement due in part to its lack of control over Chinese subsidiary, Cooper Chengshan Tire, as well as Cooper's breach of several representations, warranties and covenants, it added.

The company said that "it has worked diligently to reach a settlement with the United Steelworkers to enable Cooper to overcome the United Steelworkers injunction prohibiting Cooper from consummating the merger."

"Apollo also asserted affirmative defenses, including that conditions precedent to closing had not been satisfied because the marketing period for the financing, central to Cooper's claims in its complaint, had never commenced and that Cooper has failed to meet its contractual obligations under the merger agreement," the statement said.

Last week, Apollo's demand for a price reduction in the deal, citing problems related to the US firm's operations in China and concessions to the union, was rejected by Cooper.

In the deal announced in June, Apollo agreed to buy Cooper at USD 35 per share in an all-cash transaction that was to be completed by the end of this year.

According to Cooper, Apollo wanted a price renegotiation "far greater than the USD 2.5 reduction it had earlier proposed, and at one point referencing 'USD 8 or USD 9' per share."

Cooper maintains that "the situations with the USW and the joint venture partner and union in China are a direct result of the merger agreement, and are risks Apollo assumed under the merger agreement."

The combined company would be the seventh-largest tyre manufacturer in the world with a presence in high growth end-markets across four continents.