Cooper Tire shareholders approve $2.5-bn merger with Apollo Tyres
01 Oct 2013
Shareholders of US-based Cooper Tire & Rubber Co today approved its sale to Apollo Tyres Ltd, clearing the decks for a $2.5 billion transaction, to create the seventh-largest tyre company in the world.
Billed as one of the largest US acquisitions by an Indian firm, a wholly-owned US subsidiary of Apllo Tyres will acquire 74-per cent of Cooper's outstanding common shares after a vote in favour of the transaction.
The American firm is the 11th largest tyre maker in the world with revenue of over $4 billion.
When finalised, the merger will result in a strategic business combination that creates the seventh-largest tyre company in the world.
Approximately 78 per cent of Cooper's outstanding common shares were voted, with more than 48 million shares voted in favour of the merger, representing approximately 96 per cent of Cooper's voted shares.
''We are pleased stockholders endorsed this compelling transaction, which will create a $6.6 billion leader in the tire industry with a strong global footprint that includes a presence in the world's largest tire market of North America as well as in the fastest growing geographies of India and China,'' said Cooper chairman, chief executive officer and president Roy Armes.
Cooper and Apollo announced the proposed merger 12 June 2013 following unanimous approval by the boards of directors of both companies.
The merger is expected to close by the end of this year.
The deal, however, did not find support in the market and Apollo Tyre shares tanked 26 per cent on the BSE the day after, forcing the company management to clarify that the move would not load its Indian operations with excessive debt.
Apollo's Indian arm had taken a loan of $450 million to fund part of the $2.5 billion acquisition.
The major portion of debt of $2.1 billion would be leveraged on cash flows of Cooper and Vredestein, the company's Netherlands-based arm.
As part of the deal, Apollo Tyres will take over the operations of Cooper, including eight plants and 14,000 employees in different parts of the world.