Apollo Tyres shares jumped almost 9% to R92.20 during the intra-day trade at the BSE on Tuesday with the Delaware Supreme Court dismissing an appeal filed by US-based Cooper Tire to force Apollo towards an early closure of its acquisition. By the end of the day, the Apollo stock was up 2.30% at R86.70.
The stock market has taken the news positively, with analysts expecting Apollo may now abandon the $2.5-billion deal, which has long been seen as a drain on its finances, or at least negotiate a lower buying price from $35 per share. In fact, the negative sentiments on the deal by the investor community can be judged by the fact that on June 13, the day after the deal was first announced, Apollo’s share price had fallen by 25%.
“Based upon the filings by the parties, the Court has concluded that this interlocutory appeal was improvidently accepted. Now, therefore, it is hereby ordered that this interlocutory appeal is dismissed,” the Delaware Supreme Court order dated December 16 said.
Cooper Tire had appealed at the Delaware Supreme Court on November 12 this year seeking to reverse a partial ruling by a lower court (Delaware Chancery Court) that came out in Apollo’s favour. With the Delaware Supreme Court now dismissing the appeal, Cooper’s last ray of hope is the final order by the Delaware Chancery Court. Cooper alleges that Apollo is displaying ‘buyer’s remorse’ and wants to back out, while Apollo cites problems to deal closure such as non-availability of financial data for Cooper’s Chinese joint venture and the lower-than-expected profits recently reported by Cooper.
An Apollo spokesperson said that the litigation strategy by Cooper “has done nothing but generate unnecessary cost for its shareholders and for Apollo, and compound the obstacles that Cooper’s situation has created for this merger”.
“We are pleased by the decision of the Delaware Supreme Court today, which did more than dismiss Cooper’s appeal – the court decided the appeal was improvidently granted in the first place. Apollo continues to believe in the merits of the combination with Cooper and, notwithstanding Cooper’s stated aim to continue to pursue its misguided legal claims, is committed to finding a sensible way forward, if possible,” an Apollo statement said.