Apollo Tyres' USD 2.5 billion deal to acquire Cooper Tire has run into rough weather as its demand for price reduction because of problems related to the US firm's operations in China and concessions to workers' union has been rejected by the latter, reported PTI.
According to the complaint filed in the US court, Apollo wanted a price renegotiation "far greater than the USD 2.50 reduction it had earlier proposed, and at one point referencing 'USD 8 or USD 9' per share". As per the original deal announced in June this year, Apollo had agreed to buy Cooper at USD 35 per share in an all cash transaction.
In a statement, Apollo said the company and its financing banks, Morgan Stanley, Deutsche Bank, Goldman Sachs and Standard Chartered Bank were justified under their merger agreement to ask Cooper to provide updated financial statements and guidance "in light of the significant and unanticipated costs that go well beyond those Apollo is obligated to bear under the merger agreement.
"Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much."
It added: "While Apollo continues to be supportive of Cooper's efforts to establish control over its subsidiary's operations and to assert Cooper's rights against its JV partner, Apollo cannot be responsible for Cooper's failures to do so."
When contacted, Cooper Tire & Rubber Company Vice President, Communications & Public Affairs Anne Roman said: "The situations with the USW and the joint venture partner and union in China are a direct result of the merger agreement, and are risks Apollo assumed under the merger agreement."
On the price reduction, she said: "Cooper is acting in the best interests of our shareholders, who overwhelmingly approved the pending merger with Apollo for USD 35 per share. Cooper has not agreed that a reduction in share price is warranted."
According to Cooper's complaint in the Court of Chancery, Delaware, "On October 3, Apollo's representatives again informed Cooper that Apollo wanted a price renegotiation, this time suggesting a price reduction far greater than the USD 2.50 reduction it had earlier proposed, and at one point referencing 'USD 8 or USD 9' per share."
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