Indian tyre company Apollo Tyres is set to take over US-based Cooper Tire and Rubber Co, with the shareholders having approved the US$2.5 billion sale, thus moving forward towards the set up of the world’s seventh biggest tyre maker and the second largest US acquisition by an Indian company.
However, the deal has faced hurdles, such as the opposition from workers at Cooper’s joint venture in China and US labour issues. But the two companies say they expect to close the deal by year-end, according to a Reuters report.
With this acquisition, Apollo intends to gain a foothold in the world’s two biggest auto markets, China and the US, since Cooper has plants in the US, Serbia and China. Cooper Chairman and Chief Executive Roy Armes said in a statement the deal would create a “US$6.6 billion leader in the tyre industry with a strong global footprint”.
Meanwhile, workers at Cooper’s China joint venture, Cooper Chengshan Tire in China’s eastern Shandong province, have been striking against the deal for about three months, while its local partner has filed a lawsuit seeking to dissolve the business pact. Furthermore, a US arbitrator ruled Cooper could not sell two of its factories in the country until a collective bargaining agreement was reached between Apollo and the plants’ unions.
Apollo said that closing will require agreement with the United Steelworkers and that it is working constructively to reach that goal “while preserving the benefits of the original agreement.”
Apollo plans to fund the acquisition entirely through debt, most of which will be raised through Cooper, whose market value is currently nearly four times that of the Indian company.