Apollo Tyres to acquire Cooper Tire & Rubber Company

July 13, 2013 10:01 am

Apollo Tyres and Cooper Tire & Rubber Company have announced the execution of a definitive merger agreement under which a wholly owned subsidiary of Apollo will acquire Cooper in an all-cash transaction valued at about ` 14,500 crore. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cooper stockholders will receive $35 per share in cash. The transaction represents a 40 per cent premium to Cooper’s 30-day volume weighted average price.
This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution. Apollo, founded in 1972, has an international reputation for high-performance tires across a portfolio of well-known premium and mid-tier brands, including the flagship Apollo brand and Vredestein. Cooper, the 11th largest tire company in the world by revenue, was founded in 1914 and today supplies premium and mid-tier tires worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
The combined company will be the 7th largest tire company in the world and have a strong presence in high-growth end-markets across four continents. With a combined $6.6 billion in sales in 2012, the combined company will have a full range of brands and greater ability to satisfy customer needs worldwide.
The combination is expected to deliver value creation benefits of approximately `465-700 crore per annum at the EBITDA level. These ongoing benefits are expected to be fully achieved after 3 years and derived from operating scale, sourcing benefits, technology, product optimisation, and manufacturing improvements. The transaction is expected to be immediately accretive to Apollo’s earnings. The close of the transaction, assuming timely customary closing conditions is expected to take place within the second half of 2013. Following the close, Cooper will become a privately held company and its common stock will no longer be traded on the New York Stock Exchange.