Cooper Tire & Rubber Co. (CTB:US)’s shareholders voted to accept a merger with Apollo Tyres Ltd. (APTY), paving the way for completion of the $2.5 billion transaction, the largest acquisition by an Indian company in North America.
Shareholders with more than 74 percent of Cooper Tire outstanding stock voted in favor of the deal, Cooper said in a statement yesterday. Apollo said in June it would pay $35 a share to acquire Cooper Tire. The shareholders’ approval comes even as labor unions in the U.S. and China raise objections to the transaction.
Apollo is looking to offset slower automobile demand in India and Europe amid weaker economic expansion. The New Delhi-based company, which has said it wants to be among the top 10 tiremakers by 2016, would enter the U.S., the second-biggest auto market, where deliveries are on pace for the best year since 2007.
Shares of Apollo slumped as much as 8.9 percent and were trading 2.3 percent lower at 65.15 rupees as of 11:13 a.m. in Mumbai, poised for their lowest since Sept. 13. The stock has declined 29 percent since the company announced its plan to acquire Cooper on June 12. Cooper shares have gained 25 percent in the period.
The Indian tire maker plans to fund the purchase through debt, with Morgan Stanley and Deutsche Bank AG hired to manage a $1.88 billion sale of high-yield bonds issued by Cooper, according to Chief Financial Officer Sunam Sarkar. Standard Chartered Plc has underwritten a $450 million bridge loan, Sarkar said last month.
A Chinese court last week rejected a request to relocate a dispute between Cooper and its China partner to Hong Kong. Chengshan Group Co. in July filed a lawsuit for the dissolution of its venture with Cooper, saying the sale to India’s Apollo would undermine the venture’s operations. Cooper has said the litigation lacks merit.
Separately, an arbitrator last month ordered Cooper to put the sale of plants in Findlay, Ohio, and Texarkana, Arkansas, on hold until it reached a collective bargaining agreement covering about 2,500 workers.
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