Apollo Tyres $2.5 billion offer to acquire Cooper Tire & Rubber is close to a collapse after labor problems in the U.S. and China led the Indian company to seek a lower price for the purchase.
According to an Oct. 4 complaint made by Cooper to the Delaware Chancery Court, Apollo wants to decrease its $35-a-share offer to as low as $26 and is now playing delay tactics in order to force its way out of the deal, which expires on Dec. 31.
Since the June report of what could have become India’s biggest acquisition of a North American business, the deal has faced increased opposition from employees in China and the U.S., as well as from Cooper’s Chinese partner.
“This deal didn’t seem like it was very well planned,” said Manish Sonthalia, a fund manager at Motilal Oswal Asset Management Co. in Mumbai. “Unless there is resolution from both sides, the deal is as good as dead.”
Morgan Stanley, Deutsche Bank AG and Greater Pacific Capital were on Apollo’s side, advising it on the acquisition agreement, while Bank of America Corp.’s Merrill Lynch sided with the US Cooper. Talks between Apollo and Cooper have now taken a turn for the worse, as each company publicly says the other is failing to honor the purchase agreement.