Cooper Tire & Rubber Co's efforts to force Apollo Tyres Ltd to complete its proposed acquisition of the U.S. company for $2.3 billion received another legal setback, paving the way for the Indian company to walk away from the deal.
The Delaware Supreme Court on Monday dismissed Cooper Tire's appeal against an earlier lower court ruling that Apollo Tyres Ltd was meeting its obligations to reach new contract terms with unions at Cooper plants in Ohio and Texas.
With the latest court ruling, which came three days before it was due to be delivered, the Findlay, Ohio-based company has only a slim chance to keep Apollo Tyres Ltd from walking away from the long-pending and contentious deal.
Apollo Tyres Ltd, which would become the world's seventh-biggest tire maker if the deal is completed, wants to pay less than the $35 per share agreed in June because of demands by unions at Cooper plants and disruptions at Cooper's venture in China.
Cooper wanted the Delaware Supreme Court to overturn a ruling by a judge on the lower Court of Chancery who found last month that Apollo had not breached its obligations under the terms of the deal.
A new ruling was to be issued by Dec. 31, when the merger agreement allows Apollo to walk away.
"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 said in a statement on Tuesday.
"Cooper's litigation strategy to date 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," the Indian company said.
Apollo, which is seeking to cut its dependence on domestic sales through the Cooper acquisition, said it continued to believe in the merits of the merger with the U.S. company and that it was "committed to finding a sensible way forward, if possible."
Cooper Tire could not immediately be reached for a comment outside the U.S. business hours.
The Indian company now has the option of walking away from the deal or renegotiating the transaction terms with Cooper if the U.S. company agrees to such a move, two sources with knowledge of the process said.
APOLLO SHARES RISE
Apollo stock rose as much as 8.7 percent on Tuesday to 92.15 rupees, a level last seen before the deal was announced in June,