Cooper Tire asks court to compel Apollo to close $2.5 billion deal
(Reuters) - Cooper Tire & Rubber Co (CTB.N) on Friday said it has filed a complaint in a U.S. court to push India's Apollo Tyres (APLO.NS) to close its $2.5 billion (1.6 billion pounds) acquisition of the American company in a timely manner.
Apollo, which is seeking to create the world's seventh-largest tyre company through the takeover, said it was disappointed by the legal action and was working to complete the deal as expeditiously as possible.
"We are disappointed that Cooper has taken this unusual step and question their motives. The litigation simply has no basis," Apollo said in an emailed statement.
Cooper's move is the latest complication in the deal that has been plagued by opposition from some workers since its announcement.
Cooper filed a complaint in the Delaware Chancery Court, saying Apollo was delaying settling issues with some of its labour from the United Steel Workers (USW) union, who have asked that new agreements be drawn up between them and the Indian company before concluding the deal.
Apollo is aiming to gain a foothold in China and the United States -- the two biggest auto markets -- through the pending acquisition. But the deal is being opposed by workers at Cooper's joint venture in China, and has run into further trouble over demands made by the U.S. labour union.
"We have been working diligently to assist Cooper in resolving its outstanding issues with the United Steel Workers," Apollo said. "We look forward to closing as expeditiously as possible once we reach agreement with the USW and complete the marketing of our financing," it added.
It said it was also supporting Cooper in reaching a resolution in its "financially damaging dispute" with its Chinese joint venture partner.
Workers at Cooper's China joint venture, Cooper Chengshan Tire Co in China's eastern Shandong province, have been striking against the deal for about three months, while its local partner has filed a lawsuit seeking to dissolve the business pact.
The acquisition is to be funded entirely through new debt, most of which will be raised through Cooper. The banks financing the deal include Standard Chartered (STAN.L) and Morgan Stanley (MS.N). Apollo said it continued to have committed financing.
Cooper shares fell 9 percent in extended trading as the legal action was the latest indication of trouble in the deal. The stock is now trading more than $9 off Apollo's $35-per-share offer price.
Under certain conditions, the merger can be called off without a termination fee if the deal is not consummated by the end of the year. Apollo could be liable to pay a break-up fee of $112.5 million if it walked away from the deal.
Cooper Tire shareholders had on Monday approved its sale to Apollo.
"With their (shareholder) approval, we have met our conditions for closing," Cooper Chief Executive Roy Armes said in a statement.
"The complaint filed today is a necessary step in the process to assure that the terms of the merger agreement are met as required and that we do everything possible to get the transaction closed promptly," Armes said.
Cooper Tire shares closed 5.6 percent lower at $29.51 on the New York Stock Exchange on Friday.
(Reporting by Reporting by Mridhula Raghavan and Chris Peters in BANGALORE and Aradhana Aravindan in MUMBAI; Editing by Michael Perry)
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