Sharp differences between Apollo Tyres and U.S.-based Cooper Tire over a reduction in the price to be paid by the Indian firm as part of the takeover bid have put a question mark over the fate of the deal.
The disagreements came to light after Cooper, last week, filed a complaint in a U.S. court to push the Indian company to “expeditiously close the pending merger between the two tyre companies”.
Responding to the complaint filed by Cooper, Apollo Tyres, in a statement issued on Monday , accused Cooper of misrepresenting facts about its Chinese operations and being unwilling to give concessions to its workers’ union in America, the United Steel Workers (USW).
The company, however, added tha its remains firmly of the belief that a merger with Cooper is compelling from a strategic perspective. “Contrary to Cooper’s complaint, we have been working diligently to address significant post-announcement impediments,” it said.
Apollo has also asked for reduction in the price of the deal, which Cooper has acknowledged.
“Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much. On top of the USW issue, Cooper has breached material representations and covenants, including with respect to its majority-owned China subsidiary due to the fact that Cooper has no control over the subsidiary or access to its books and records,” it said .
Elaborating on the issue related to Cooper’s China operations, Apollo Tyre said, “Cooper’s inability to access the facilities of its Chinese subsidiary, to determine what products this subsidiary is producing or to whom those products are being sold, to track or control how its funds are being spent or even to access operating or financial information, either physically or remotely, goes well beyond any typical work stoppage.”
The company has asked Cooper to confirm that it has sufficient control over and access to its majority-owned subsidiary in China to permit it to deliver current consolidated financial information and auditors’ comfort letters and that Cooper is in compliance with covenants and representations in the merger agreement.
