Putting a question mark over the proposed $2.5 billion acquisition of Cooper Tire, Apollo Tyres has accused the US-based tyre of misrepresenting facts about its Chinese operations and unwillingness to give concessions to workers' union in America, the United Steel Workers, to take the deal forward.
While asserting that it is still working to close the acquisition, Apollo said it has asked for reduction in the price of the deal in the wake of "post-announcement impediments", which Cooper has acknowledged.
"...Cooper has breached material representations and covenants, including with respect to its majority-owned China subsidiary due to the fact that Cooper has no control over the subsidiary or access to its books and records," Apollo Tyres said in a statement.
Comments from Cooper Tire could not be obtained as emailed query remained unanswered.
Stressing that it is looking forward to proceed with the acquisition, the Indian tyre major said: "Apollo remains firmly of the belief that a merger with Cooper is compelling from a strategic perspective. Contrary to Cooper's complaint, we have been working diligently to address significant post-announcement impediments....”
"Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much."
Elaborating on the issues related to Cooper's China operations, Apollo Tyre said: "Cooper's inability to access the facilities of its Chinese subsidiary, to determine what products this subsidiary is producing or to whom those products are being sold, to track or control how its funds are being spent or even to access operating or financial information, either physically or remotely, goes well beyond any typical work stoppage."
The company has asked Cooper to confirm that it has sufficient control over and access to its majority-owned subsidiary in China to permit it to deliver current consolidated financial information and auditors' comfort letters and that Cooper is in compliance with covenants and representations in the merger agreement.
"To date, Cooper has been unable or unwilling to provide these confirmations," the Indian tyre major said, adding "Cooper has misrepresented its management and control of this asset (China JV) to Apollo and to its own shareholders".
"While Apollo continues