Apollo Tyre will acquire US-based Cooper Tire & Rubber Company in an all-cash transaction valued at approximately Rs 14,500 crore. The acquisition of Cooper Tire is largest deal for the sector in India. It is the company’s third major acquisition in the last seven years.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cooper stockholders will receive $35.00 per share in cash. The transaction represents a 40% premium to Cooper’s 30-day volume-weighted average price, a press release from the company stated.
It will finance the deal through cash flows from its Indian operations and by leveraging that of Cooper Tire and Apollo's European operations.
Post acquisition, Apollo will become the seventh largest tyre manufacturer in the world. Apollo and Cooper have a combined sales worth $6.6 billion in 2012. Cooper is 11th largest tyre company in the world by revenue focussing on replacement tyres and supplies tyres through brands Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
"With a combined $6.6 billion in total sales in 2012, the combined company will have a full range of brands and greater ability to satisfy customer needs worldwide," it added."The combined company will be uniquely positioned to address large, established markets, such as the US and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth," Kanwar said.
Cooper Tire & Rubber Co Chairman and President Roy Armes said the deal is a compelling transaction that is in the best interest of Cooper's stockholders and offers attractive benefits to its customers and employees.
"Together, our two organisations have almost no geographic overlap and significant opportunities for growth," he added.