With no compromise in sight yet, Cooper Tire & Rubber’s dispute with India’s Apollo Tyres Ltd. over a $2.5 billion buyout goes before a judge in a non-jury trial set to begin today in Delaware Chancery Court.
Talks to complete the largest acquisition by an Indian company in North America soured in October amid opposition from U.S. and Chinese workers. Apollo, based in Gurgaon, India, sought to cut its $35-a-share offer by as much as $9, citing the labor issues. On Oct. 4, the day Apollo’s purchase was originally scheduled to close, Findlay, Ohio-based Cooper sued, alleging Apollo was intentionally delaying completion.
In pretrial filings, Apollo denies it is suffering from “buyer’s remorse,” contending it still wants to close and Cooper hasn’t lived up to the contract. Central to Apollo’s defense is the possibility of a “material adverse effect” or significant change in Cooper’s worth since the contract was signed — which could kill the deal.
Judge Sam Glasscock III, who granted fast-track status to the case being heard in Wilmington, must decide whether to grant Cooper’s request and force Apollo to consent to a new labor agreement reached last week. The agreement renders Apollo’s objections to the transaction moot, Cooper said in court papers. Apollo called the labor deal “illusory” and accused Cooper of attempting to “hijack” the case.
Cooper maintains it has complied with the sale agreement, despite troubling negotiations with the United Steelworkers union and a recalcitrant Chinese unit, and claims Apollo is angling for a better bargain.
In addition to the labor problems, Apollo also points to a lack of current financial data from Cooper, and to ambiguous projections that suggest serious future losses.
by Aurel Niculescu
) - Tuesday, November 5th, 2013 - filed under Industry
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