Apollo Tyres to take Cooper Tire to court after US co ends $ 2.5 bn deal

Dec 30 2013, 22:35 IST
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Cooper Tire said Apollo Tyres notified the company that financing for the deal was no longer available. (AP) Cooper Tire said Apollo Tyres notified the company that financing for the deal was no longer available. (AP)
SummaryAnnouncement follows court ruling favouring Apollo Tyres in spat over merger with Cooper Tire.

whether Apollo would pay a $112.5 million break-up fee, but said it believes the Indian tyre maker "has breached the merger agreement," and added it would continue to pursue "legal steps" to protect the company and its shareholders.

Apollo was not immediately reachable for comment.

The two companies have been mired in a bitter legal stand-off over the deal. Cooper has tried to force the Indian company to complete the deal under the agreed terms, while Apollo sought a price cut of as much as $9 a share, citing Cooper's U.S. labour trouble and disruptions at a Chinese joint venture.

"It is time to move our business forward," said Roy Armes, Cooper Tire's chief executive in the statement.

"While the strategic rationale for a business combination with Apollo is compelling, it is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo and we have been notified that financing for the transaction is no longer available," he added.

Expectations the deal would unravel rose after a court in Delaware in November ruled the Indian tyre maker had not breached its obligations, delivering a setback to Cooper's attempt to compel Apollo to close the deal.

An appeal by Cooper was dismissed by the Delaware Supreme Court this month. The case has returned to the lower court, which has asked for an update on Jan. 10 on the status of the deal.

The two sides have been in an acrimonious stand-off for months, with Cooper accusing Apollo of suffering a case of buyer's remorse. The U.S. tyre maker has refused to accept a lower offer from Apollo.

Meanwhile, the Indian tyre maker has blamed Cooper, saying issues arising from the U.S. company's labour troubles in China and the United States had made it difficult to secure financing for the deal.

At the heart of the dispute has been Apollo's failure to reach contract agreements with Cooper's United Steelworkers union as mandated by a U.S. arbitrator in September.

At the same time, Chengshan Group, Cooper's partner in China, has opposed any merger with Apollo, filing a lawsuit against the U.S. tyremaker to dissolve their joint venture.

Apollo has said these two developments were not expected at the time of the deal, and as a result has sought to cut the price of the deal. Cooper maintains the issues are a result of the merger and says Apollo was aware of the risks.

Cooper CEO Armes said addressing

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