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Apollo, Cooper tire merger talks hit difficulty amid labor disputes

By Young-Sam Cho
Bloomberg News

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Apollo Tyres Ltd.’s talks to buy Cooper Tire & Rubber Co. for $2.5 billion have become difficult after each side said the other is breaching parts of a merger agreement that’s already being challenged by U.S. and Chinese workers.

Cooper’s request last week to a Delaware court to expedite the completion of the deal is “inexplicable and can only be seen as a diversionary smokescreen or an unfortunate acknowledgement that Cooper will be unable to meet its obligations,” Apollo said in a statement on Sunday.

The Indian bidder also said Cooper acknowledged the $35-a-share offer should be reduced.

The Findlay-based tire maker said it hasn’t agreed to any price cut and that the company is acting in the best interest of shareholders.

Almost three months after the companies announced what would be the largest acquisition by an Indian company in North America, Apollo is juggling two disputes with U.S. and Chinese workers.

While Cooper shareholders approved the purchase last week, the stock is trading 16 percent below the offer price amid concerns that the deal will collapse.

In Sunday’s statement, Gurgaon, India-based Apollo said it hired advisers to assess the financial cost of requests made by the United Steelworkers union, which represents employees at two Cooper plants, and that Cooper’s “accelerated timeline” to settle with the U.S. workers is unreasonable.

Apollo also said that Cooper has failed to provide assurances that it can provide financial statements for its Chinese unit and that it’s in compliance with the acquisition agreement.

Workers at Cooper’s majority-owned Chinese venture went on strike July 13 and are still refusing to make products for Cooper, and the U.S. company is unable to access operational and financial information there.

Cooper’s Chinese partner, Chengshan Group Co., has filed a lawsuit for the dissolution of the venture. Chengshan says the sale to Apollo would undermine the venture’s operations. Cooper has said the litigation lacks merit.

“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,” Apollo said. “Cooper has misrepresented its management and control of this asset to Apollo and to its own shareholders.”

Cooper said it’s working to resolve its issues in China and that Apollo should expedite a resolution with the U.S. union workers.

“The situations with the USW and the joint venture partner and union in China are a direct result of the merger agreement, and are risks Apollo assumed under the merger agreement,” Cooper said in a statement. “Cooper looks forward to closing this compelling transaction.”


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