An American arbitrator has said that Cooper Tire and Rubber Co. cannot sell two of its factories in the country to India’s Apollo Tyres until a collective bargaining agreement is reached between Apollo and members of the plants’ union. The decision could delay Apollo’s plan to buy US-based Cooper in a debt-funded US$2.5 billion deal, which is already facing opposition at a factory in China.
The United Steelworkers (USW) had said terms of the agreement, which covers about 2,500 USW members, will be violated if Cooper closes the deal without Apollo entering into a new agreement with the workers at Findlay, OH, and Texarkana, AR. “The USW said it looked forward to resuming bargaining with Apollo and Cooper,” USW Secretary Treasurer Stan Johnson said in a statement after the arbitrator’s decision was announced. Cooper had previously argued that the current collective bargaining agreements would continue after the merger
Apollo had agreed in June to buy Cooper Tire to take advantage of the large US and China auto markets, but labour unions in both countries and investors are worried about the risks arising from the large amount of debt. The labour union at Cooper Chengshan Tire Co. in China’s eastern Shandong province has been striking against the deal for about three months. Chengshan Group, the local partner in the joint venture, is also against the deal, and has filed a lawsuit against Cooper in a local court, seeking to dissolve the joint venture.