Apollo Tyres to acquire Cooper Tire & Rubber Co for $2.5 bn

Apollo Tyres, India's largest tyre manufacturer, is buying US-based Cooper Tire & Rubber Co for about $2.5 billion in a bid to emerge the world's seventh-largest tyre maker.

Under the terms of the deal, Apollo, the world's 15th biggest tyre manufacturer, will pay $35 per share in cash, representing a 42 per cent premium over Cooper's Tuesday closing price.

With a 13-per cent US market share and a market cap of $2.2 billion, Cooper designs, manufactures markets and sells passenger car, light truck, medium truck, racing and motorcycle tires through a number of subsidiaries, affiliates and joint ventures worldwide.

Its brands include Cooper, Mastercraft, Dean, Starfire, Dominator, Roadmaster, Avon Tyres, Mickey Thompson, Dick Cepek, Chenshan, Austone and Fortune.

Cooper, the 11th-largest tire company, which competes with Bridgestone, Goodyear and Groupe Michelin, is primarily focused on manufacturing tyres for the replacement tyre market.

The New York Stock Exchange-listed company has 60 manufacturing, sales, distribution, technical and design facilities worldwide and also owns the UK Avon Tyres brand, which produces tyres for motorcycles, road cars, and for motor racing.

North American sales account for approximately 70 per cent of its $4.2 billion revenues, with international revenues comprising the rest.

Gurgaon-based Apollo said that the merger will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution.

The combined company will have sales of $6.6 billion and become the seventh-largest tyre company in the world with a strong presence in high-growth end-markets across four continents.

Founded in 1972, Apollo Tyres commissioned its first plant in Perambra, Kerala. It expanded in 2006 by acquiring South Africa's Dunlop Tyres International. The company now has four manufacturing units in India, two each in South Africa and Zimbabwe, and one in the Netherlands and exports to over 118 countries.

Powered by its key brands, Apollo, Dunlop and Vredestein, the company offers a wide range of tyres for passenger car, light truck, truck-bus, off highway and bicycle tyres, retreading material and retreaded tyres.

Apollo uses 1,300 tonnes of rubber daily to manufacture 30 million tyres per annum and generates 59 per cent of its $2.5 billion revenues from India, 28 per cent from Europe and 13 per cent from Africa.

In India the company has a network of over 4,000 dealerships, of which over 2,500 are exclusive outlets. In South Africa, it has over 900 dealerships, of which 190 are Dunlop accredited dealers.

Apollo said that Cooper will continue to be led by its current management team and will operate out of its facilities located around the world.

''Cooper is one of the most respected names in the tire industry, with an extensive distribution network and manufacturing infrastructure, and a particularly robust presence in North America and China. The combined company will be uniquely positioned to address large, established markets, such as the US and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth,'' said, Onkar Kanwar, chairman of Apollo.

''Together, our two organizations have almost no geographic overlap and significant opportunities for growth. We share a commitment to innovation, quality, and customer service, as well as to the core values of safety, environmental sustainability, the development of our people and giving back to our communities,'' said, Roy Armes, Cooper's chairman, CEO and president.

Post closing, Cooper will become a privately held company and its common stock will no longer be traded on the New York Stock Exchange.

The deal, which has been approved by the boards of both companies, is expected to close within the second half of 2013.