Cooper Tire Judge Told Missteps Doomed Sale to ApolloJef Feeley
Cooper Tire & Rubber Co.’s failure to honor terms of a buyout agreement doomed a $2.5 billion sale of the U.S. tiremaker to its Indian competitor Apollo Tyres Ltd., a lawyer for Apollo said in court.
Labor strife in the U.S. and opposition to the purchase by Cooper’s Chinese joint-venture partner caused the Findlay, Ohio-based tire company to run afoul of the sale contract and left it unable to close the deal, John Hardiman, the lawyer, told a judge today.
Apollo urged Delaware Chancery Judge Sam Glasscock to make a final ruling on Cooper’s missteps so the Indian firm can ask an appellate court to absolve it of responsibility for the deal’s demise. Cooper claims it’s entitled to more than $100 million in damages over Apollo’s refusal to make the sale final.
Since the U.S. tiremaker wasn’t “in a position to close the deal, Cooper can’t get damages,” Hardiman said at a hearing in Georgetown, Delaware.
Cooper said in December it was dropping plans to sell itself to Apollo after financing for the transaction fell through. Apollo originally offered to buy the U.S. tiremaker for $35 a share. It cut its offer after learning of problems within Cooper’s Chinese partner, Cooper Chengshan (Shandong) Tire Co.
Officials at the Chinese joint venture who opposed the deal denied Cooper executives access to tire-making facilities in that country and refused to provide financial records demanded by Apollo as part of the buyout.
Apollo officials also argued that Cooper’s mishandling of labor negotiations with the United Steelworker’s union left it unable to satisfy the buyout agreement’s terms.
In November, Glasscock rejected Cooper’s claim that Apollo breached the pact by dragging its feet in negotiating a contract with steelworkers that would clear the way for the deal. Glasscock allowed Cooper to appeal his ruling on that single issue to the Delaware Supreme Court, which declined to hear it.
Cooper’s lawyers today urged Glasscock to issue a final order in the case without listing any more reasons for the deal’s demise.
The judge’s November ruling disposes of Apollo’s request for a final decision and “going any further than that is unnecessary and would serve as an advisory opinion,” said Robert Faxon, a lawyer for the U.S. tiremaker.
Cooper’s lawyer also argued Apollo officials knew when the deal was negotiated that the tiremaker’s Chinese partner opposed it. Faxon alleged Apollo executives used the “labor disruption” as a pretext to help scuttle the acquisition. “They were looking for possible outs,” he added.
Apollo officials accused Cooper executives in December of seeking to improperly recover more than $112 million reserved as the failed deal’s breakup fee. A lawyer for the U.S. tiremaker countered that it wasn’t requesting the monies be immediately paid out.
Cooper now wants to claim the fee to compensate it for damages tied to the deal’s collapse, Hardiman said. Apollo opposes that request, the lawyer added.
The case is Cooper Tire & Rubber Co. v. Apollo (Mauritius) Holdings Pvt, CA8980, Delaware Chancery Court (Wilmington).
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