Cooper Tire & Rubber Company today filed a complaint in Delaware Chancery Court asking that subsidiaries of Apollo Tyres be required to expeditiously close the pending merger between the two tire companies in accordance with the terms of the definitive merger agreement, the US-based firm said in a statement.
Earlier this week, Cooper Tire shareholders approved its sale to Apollo Tyres, clearing the decks for the deal, billed as one of the largest acquisitions by an Indian firm in the US.
We are disappointed that Cooper has taken this unusual step and question their motives. The litigation simply has no basis, an Apollo Tyres spokesperson said.
Apollo Tyres also said it is actively supporting Cooper in reaching a resolution in a financially damaging dispute with its Chinese JV partner. The Indian company had said in a June BSE filing that the transaction is likely to close in the second half of 2013.
Cooper is asking the court to compel Apollo to take actions so that the transaction may close, Cooper Tire said. The company said in its complaint that Apollo is seeking to delay an agreement with United Steelworkers (USW), which represents Cooper employees at Findlay, Ohio, and Texarkana and Arkansas facilities.
We continue to have committed financing ready to launch, subject to resolving the USW issues and receiving current and updated Cooper financial statements. We look forward to closing as expeditiously as possible once we reach an agreement with the USW and complete the marketing of our financing, the Apollo Tyres spokesperson said.
An arbitrator ruled on September 13 that as a result of the pending merger, Cooper and Apollo must enter into new agreements with the union prior to closing, Cooper said.
By delaying resolution with USW, Apollo is breaching the merger agreement, the US firm said. The complaint...is a necessary step in the process to assure that the terms of the merger agreement are met as required and that we do everything possible to get the transaction closed promptly, Cooper chairman, CEO and president Roy Armes said.
The strategic rationale for the merger with Apollo is solid and we look forward to finalising the transaction, which will create the seventh-largest tire company in the world, he added. On June 12, Apollo Tyres had announced it would acquire Cooper Tire & Rubber Company in an all-cash transaction. In terms of tyre production, Apollos capacity will more than double from 1,500 tonnes a day to 3,500 tonnes.