Apollo Tyres Ltd. (APTY) headed for the highest price in more than six months in Mumbai trading after a Delaware court rejected an appeal by Cooper Tire & Rubber Co. (CTB) to force a $2.5 billion takeover by India’s biggest tiremaker.
Shares of Apollo rose 7.1 percent to 90.80 rupees, poised for the highest level since June 12, as of 10:07 a.m. in Mumbai. They plunged to as low as 56.35 rupees on June 25, after Apollo said June 12 it would buy Cooper for $35 a share.
Talks to complete the largest acquisition by an Indian company in North America soured in October amid opposition from U.S. and Chinese workers. Apollo, based in Gurgaon, India, sought to cut its $35-a-share offer by as much as $9, citing the labor issues. On Oct. 4, the day Apollo’s purchase was originally scheduled to close, Findlay, Ohio-based Cooper sued, alleging Apollo was intentionally delaying completion.
The state supreme court in Dover issued a one-page order yesterday, signed by Justice Randy J. Holland, dismissing the appeal of a ruling by the Delaware Chancery Court. Chancery Judge Sam Glasscock ruled last month that Apollo fulfilled its obligations to resolve related disputes with a U.S. labor union.
Meghan Gavigan, a spokeswoman for Apollo, said yesterday the company is pleased with the ruling.
“Cooper’s litigation strategy to date has done nothing but generate unnecessary cost for its shareholders and for Apollo and compound the obstacles that Cooper’s situation has created for this merger,” she said in an e-mailed statement. “Apollo continues to believe in the merits of the combination with Cooper” and “is committed to finding a sensible way forward, if possible.”
As an alternative to a settlement or paying what it originally agreed, Apollo could hand over a $112.5 million “reverse breakup fee” to walk away, according to Cooper’s complaint.
The decision was a “procedural ruling,” Anne Roman, a spokeswoman for Cooper, said in an e-mailed statement yesterday. She said both parties will return to Chancery Court to resolve the remaining questions in the case.
“Cooper believes Apollo has breached the merger agreement and we will continue to pursue our legal options,” she said.
To contact the reporter on this story: Siddharth Philip in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: Young-Sam Cho at email@example.com