Cooper Tire & Rubber Co. (CTB - Free Report) announced the termination of its merger agreement with Apollo Tyres Ltd. The company will now be focusing on improving its business operation.
The acquisition of Cooper Tire by a wholly-owned subsidiary of Apollo Tyres was announced in Jun 2013. The purchase consideration for the all-cash transaction amounted to $2.5 billion. Apollo Tyres was to pay $35 per share to the shareholders of Cooper Tire, which included a 40% premium on the 30-day volume-weighted average price of Cooper Tire at the time of the deal’s announcement.
With the dismissal of the merger proposal Cooper Tire will be pursuing better operating results. The company is optimally positioned due to its good quality brands, loyal customer base, and worldwide network of manufacturing facilities, efficient workforce and strong technical capabilities.
Since the signing of the merger deal Cooper Tire was facing challenges from its Chinese joint venture (JV) partner Chengshan Group Co. and the Chinese labor union. The Chinese workers felt that the merger with Apollo Tyres would jeopardize their employment and were seeking dissolution of the JV. They stopped the production of Cooper Tire-branded tires and were not providing any financial information to the company.
As the agreement has been terminated, Cooper Tire will be working towards restoring normal operations at its Chinese JV. This will help the company resume regular financial reporting.
Cooper Tire currently carries a Zacks Rank #3 (Hold). Some prominent players in the tire and rubber industry include The Goodyear Tire & Rubber Co. (GT - Free Report) , Continental AG (CTTAY - Free Report) and Bridgestone Corp. (BRDCY - Free Report) .