New Delhi: Differences between Apollo Tyres and Cooper Tire over reduction of price due to problems related to the US firm's operations in China and concessions to workers' union have put a question mark over the Indian firm's proposed USD 2.5 billion takeover of the latter.
While Apollo accused Cooper of misrepresenting facts about its Chinese operations, the US firm asserted that the risks were part of the deal.
Moreover, Apollo's assertion that its demand for decrease in the price of the deal in the wake of "post-announcement impediments" has been acknowledged by Cooper which was refuted by the latter.
In a statement, Apollo said it and its financing banks, Morgan Stanley, Deutsche Bank, Goldman Sachs and Standard Chartered Bank were justified under their merger agreement to ask Cooper to provide updated financial statements and guidance "in light of the significant and unanticipated costs that go well beyond those Apollo is obligated to bear under the merger agreement".
"Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much," the company said.
"While Apollo continues to be supportive of Cooper's efforts to establish control over its subsidiary's operations and to assert Cooper's rights against its JV partner, Apollo cannot be responsible for Cooper's failures to do so," it added.
When contacted, Cooper Tire & Rubber Company Vice President, Communications & Public Affairs Anne Roman said: "The situations with the USW (United Steelworkers) 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."
On the price reduction, she said: "Cooper is acting in the best interests of our shareholders, who overwhelmingly approved the pending merger with Apollo for USD 35 per share. Cooper has not agreed that a reduction in share price is warranted."
Apollo also alleged that Cooper misrepresented facts about the latter's problems in its Chinese subsidiary.
"...Cooper has breached material representations and covenants, including with respect to its majority-owned China subsidiary due to the fact that Cooper has no control over the subsidiary or access to its books and records," it said.
Apollo also refuted Cooper's complaint filed last week in a US Court that it was seeking to delay an agreement with the United Steelworkers (USW), which represents Cooper employees at facilities in Findlay, Ohio and Texarkana, Arkansas.
"Apollo has indicated to the USW in discussions over the past two weeks that Apollo is willing to make material concessions to the USW, subject to arranging for additional financing or financial concessions. Cooper had been unwilling to provide similar terms to the USW in negotiations over the three month period before its arbitration setback," the Indian firm said.
First Published: Monday, October 07, 2013, 22:07