Cooper Tire & Rubber Co. asked a judge to disregard testimony by key Apollo Tyres Ltd. executives in a lawsuit over a stalled $2.5 billion merger, arguing they never read the takeover agreement, according to court documents.
Chairman Onkar Kanwar, Vice Chairman Neeraj Kanwar and Guarav Kumar, an Apollo strategist, had no independent understanding or awareness of key aspects of the proposed transaction apart from information they got from lawyers, Cooper said in documents filed before a trial in the suit began in Delaware Chancery Court and made public today.
“Each of Apollo’s key negotiators denied having read the merger agreement, and used this denial as grounds for having no understanding or awareness of key provisions of the agreement or negotiations surrounding those provisions,” Stephen Norman, an attorney for Cooper, wrote in the papers, citing deposition testimony.
Cooper is in court today in Georgetown, Delaware, where lawyers are preparing to present their final arguments to Judge Sam Glasscock III. The judge is to decide whether labor troubles at Cooper, the fourth-largest U.S. tiremaker, unexpectedly damaged the value of the business and provided a basis for Apollo to cancel the deal or pay a lower price.
In the papers unsealed today, Cooper cited Onkar Kanwar’s deposition testimony that he never read the merger agreement and wasn’t involved in direct negotiation of business terms. Kanwar said he knew only the ultimate price and termination fee and left the details to his son Neeraj Kanwar and other members of Gurgaon, India-based Apollo’s management team, according to the documents.
Neeraj Kanwar, Apollo’s managing director, said in the deposition that he negotiated the reverse breakup fee and go-shop provisions of the merger agreement.
He “lacked knowledge of multiple provisions of the merger agreement, including, for example, pricing provisions,” according to the court papers.
Guarav Kumar, Apollo’s head of corporate strategy and finance, said he was responsible for providing analytical support for decisions, including financial analysis and due diligence, and preparing the business plan, according to the filing.
“Mr. Kumar testified that he understood the financing structure, but had no understanding of how the transaction itself is structured,” according to the documents.
Neeraj Kanwar testified at the trial, saying a $2.50-a-share reduction of the $35-a-share offer was needed to cover as much as $125 million in concessions demanded by the United Steelworkers union in exchange for blessing the buyout.
Kanwar, whose family owns more than 40 percent of Apollo’s shares, also testified he was concerned that Cooper had lost control of its Chinese joint venture and had no access to its financial data. That subsidiary, Chengshan Group Co., which operates Cooper’s biggest plant, stopped making Cooper tires on July 13 in protest of the Apollo deal.
The case is Cooper Tire v. Apollo, CA8980, Delaware Chancery Court (Wilmington).