Apollo Tyres, on Wednesday, said it would acquire U.S.-based Cooper Tire & Rubber Company in an all-cash transaction valued at approximately Rs. 14,500 crore ($2.5 billion), making the combined entity the seventh largest tyre company in the world.
Cooper is the 11th largest tyre maker in the world by revenue. It supplies premium and mid-tier tyres through brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
Eight plants
As part of the deal, Apollo Tyres will take over the operations of the American firm, including eight plants and 14,000 employees spread across different parts of the world.
“This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” Apollo Tyres Chairman Onkar S Kanwar said.
In terms of tyre production, Apollo's capacity will more than double from 1,500 tonnes per day to 3,500 tonnes per day, according to Apollo Tyres Vice-Chairman and Managing Director Neeraj Kanwar.
$35 per share
Under the terms of the agreement, approved by the boards of directors of both companies, Cooper stockholders will receive $35.00 per share in cash.
The close of the transaction, assuming timely regulatory approvals and other customary closing conditions, as well as approval by Cooper’s stockholders, is expected to take place within the second-half of 2013.
Same team
Following the close of the transaction, Cooper will become a privately-held company, and its common stock will no longer be traded on the New York Stock Exchange.
It is expected that Cooper will continue to be led by members of its current management team, and will continue to operate out of its facilities located around the world.
Cooper will continue to recognise the labour unions and honour the terms of collective bargaining agreements presently in effect while generally maintaining compensation and benefit levels for non-union employees, Apollo Tyres said in a release.
“The combined company will be uniquely positioned to address large and established markets such as the U.S. 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,” Onkar S Kanwar said.
Cooper Tire & Rubber Co Chairman and President Roy Armes said that both organisations had almost no geographic overlap.
Financial advisors
Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. served as financial advisors and investment firm Greater Pacific Capital acted as strategic and financial advisor to Apollo.
Standard Chartered is the sole provider of transaction financing at the Apollo Tyres level and is also the structuring advisor.
Morgan Stanley Senior Funding, Inc., Deutsche Bank Securities Inc., Standard Chartered and Goldman Sachs Bank USA are joint lead arrangers, providing committed funding to Apollo’s acquisition subsidiary.
