Apollo Tyres Surges As Court Dismisses Cooper Tire & Rubber Appeal - Update

(RTTNews) - The Delaware Supreme court Monday dismissed the appeal by Cooper Tire & Rubber Co. (CTB) seeking to force the $2.5 billion takeover by India-based Apollo Tyres Ltd. Shares of Apollo Tyres climbed nearly 5 percent in initial trading on the Bombay Stock Exchange.

Findlay, Ohio-based Cooper agreed in mid-June to be acquired by Apollo Tyres for $35 per share in an all-cash deal valued at about $2.5 billion to create the world's seventh-largest tire company.

Cooper stockholders voted overwhelmingly to approve the pending merger on September 30, satisfying Cooper's final affirmative condition under the merger agreement to close the deal.

However, in early October, Cooper filed a complaint in Delaware Chancery Court asking that subsidiaries of Apollo Tyres be compelled to expeditiously close the pending merger in accordance with the terms of the definitive merger agreement. The company alleged that Apollo was deliberately delaying a labor agreement with the United Steelworkers union in order to re-negotiate a better deal.

Further, on October 7, Apollo Tyres said it asked Cooper Tire to reduce the price consideration in light of labor issues in the U.S. and hurdles at the company's joint venture in China.

Apollo Tyres also claimed that Cooper acknowledged that a price reduction was warranted and suggested that the companies were negotiating the amount. However, Cooper denied that it agreed to any concessions on the total consideration for its acquisition.

On November 9, Judge Sam Glasscock, III, Vice Chancellor of the Delaware Court of Chancery, said the Delaware Court has found that Apollo is not in breach of its merger agreement with Cooper Tire. The Court also found that Apollo has used 'reasonable best efforts' to negotiate with the USW and that, contrary to Cooper's claims, 'nothing in Apollo's conduct indicates buyer's remorse.'

Following this, Cooper filed with the Delaware Supreme Court an appeal of the partial ruling rendered on November 8. Cooper also asked the Delaware Supreme Court to rule on its appeal on an expedited basis, before December 31, the date through which its merger agreement with Apollo remains in effect.

Until December 31, according to the November 8 partial ruling, both Cooper and Apollo are required to continue to perform their obligations under the merger agreement.

Dismissing the appeal of the ruling in Delaware Chancery Court, Justice Randy Holland of Delaware Supreme Court in Dover issued a one-page statement, stating this interlocutory appeal was improvidently accepted. The decision came three days ahead of a scheduled court hearing.

Apollo shares are gaining 4.8 percent in Bombay Stock Exchange at 88.85 rupee.

CTB fell over 5 percent on Monday to close at $21.62.