Cooper Tire & Rubber Co.’s appeal of a decision blocking the company’s bid to force a $2.5 billion takeover by Apollo Tyres Ltd. was dismissed by Delaware’s highest court.
The state supreme court in Dover issued a one-page order today, signed by Justice Randy J. Holland, dismissing the appeal of a ruling by the Delaware Chancery Court.
Cooper announced June 12 that it would be bought by Apollo for $35 a share, and sued after the buyer failed to close the deal. Chancery Judge Sam Glasscock ruled last month that Gurgaon, India-based Apollo fulfilled its obligations to resolve related disputes with a U.S. labor union.
“This interlocutory appeal was improvidently accepted,” Holland wrote in today’s decision, which came three days before a hearing was scheduled at the court.
Cooper shares, which fell as much as 9.7 percent after the ruling, dropped 5 percent to $21.62 in New York today.
“My gut tells me the supreme court said, ‘This is a mess; it’s not appropriate to spend our time on,’” Larry Hamermesh, a professor at Widener University School of Law and a former lawyer at the U.S. Securities and Exchange Commission, said in a phone interview.
The case will go back to Chancery Court for the parties “to slog it out,” according to Hamermesh. “I’ve been saying all along, don’t count on $35 coming out of this.”
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.
“Today’s action was not a decision on the merits of the issue on appeal, but instead was a procedural ruling,” Anne Roman, a spokeswoman for Findlay, Ohio-based Cooper, said in an e-mailed statement. 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.
Meghan Gavigan, a spokeswoman for Gurgaon, India-based Apollo, said 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.”
The cases are Cooper Tire & Rubber Co. v. Apollo (Mauritius) Holdings Pvt, CA8980, Delaware Chancery Court (Wilmington) and 624, 2013, Supreme Court of Delaware (Dover).