By Phil Milford
Cooper Tire & Rubber Co. isn’t yet entitled to an order that would force India-based Apollo Tyres Ltd. to pay a contractually agreed $35 a share for the company, a judge said.
Cooper must prove it had satisfied all the conditions of the $2.5 billion buyout agreement and whether it did so remains unresolved in litigation, Delaware Chancery Court Judge Sam Glasscock III wrote in a Nov. 9 clarification letter to lawyers.
“Cooper has failed to demonstrate a present entitlement to specific performance,” the judge wrote, referring to the $35-a-share payment.
After a three-day trial and closing arguments last week, Glasscock issued a preliminary ruling on Nov. 8, rejecting Cooper’s contention that Apollo delayed negotiations with Cooper’s United Steelworkers’ union and breached the agreement by acting in bad faith.
Findlay-based Cooper sued after Apollo failed to complete the buyout by an Oct. 4 deadline and suggested the stock might be worth as much as $9 a share less.
Apollo “continues to believe in the merits of the combination and is committed to finding a sensible way forward,” the company said Monday when releasing its fiscal second-quarter results. Apollo’s net income rose to 2.19 billion Indian rupees ($34.5 million) in the quarter ending Sept. 30 from 1.52 billion rupees in the year-earier period, beating analyst estimates of 1.74 billion rupees.
Another point of contention, Glasscock wrote, is whether Cooper can comply with a request that it provide third-quarter company financial results by Thursday, to satisfy Apollo’s lenders.
Cooper’s China venture, called Cooper Chengshan (Shandong) Tire Co., operates the company’s biggest manufacturing site, according to its union.
Workers there stopped producing Cooper tires July 13 to protest the Apollo deal.
“Cooper is unlikely to be able to provide those financials due to the physical seizure of a Cooper subsidiary in China by a minority partner,” Glasscock wrote.
He added that if “timely reporting of the third-quarter financials is completed,” Cooper’s request for “specific performance will remain viable.”
Cooper Chengshan, a joint venture founded in 2006 in the eastern Chinese city of Rongcheng, has more than 5,000 workers and the capacity to produce 15 million tires a year, according to its website.
The judge has said he would try to release a fuller ruling on issues in the lawsuit within a few days.
Cooper’s options include agreeing to a lower price that would accommodate Apollo. Options for Apollo include paying a $112.5 million “reverse breakup fee” to abandon the deal, according to Cooper’s complaint.