Cooper Tire & Rubber Co.
) merger with Apollo Tyres Ltd. has received an astounding 96%
support of the voting shareholders of the company. Voting rights
were exercised for around 78% of the outstanding common shares,
of which 48 million or 74% were in favor of the deal.
The merger is expected to close by the end of 2013. The
resulting company will be the seventh-largest tire company in the
world with presence in various lucrative markets such as North
America, India, China, Latin America and Africa. Currently,
Cooper Tire is the 11
largest tire company in the world, on the basis of revenues.
The acquisition of Cooper Tire by a wholly owned subsidiary of
Apollo Tyres was announced in Jun 2013. The transaction was
approved by the board of both companies before the deal was made
public. Thereafter, the deal received clearance from both U.S.
and foreign regulatory bodies.
The purchase consideration for the all-cash transaction
amounted to $2.5 billion. Apollo Tyres will pay $35 per share to
the shareholders of Cooper Tire, which includes a 40% premium on
the 30-day volume-weighted average price of Cooper Tire at the
time of the announcement of the deal.
The acquisition will result in benefits of operating scale,
sourcing benefits, technology, product optimization, and
manufacturing improvements, which are expected to boost earnings
before interest, taxes, depreciation and amortization (EBITDA) by
$80-120 million per annum after 3 years. However, the earnings of
Apollo Tyres are expected to increase post the acquisition.
However, the deal is facing opposition from Cooper Tire's
Chinese joint venture. The Chinese workers feel that the deal
will jeopardize their employment and are seeking dissolution of
the joint venture.
Cooper Tire currently carries a Zacks Rank #5 (Strong Sell).
Some stocks that are worth considering in the same industry
Goodyear Tire & Rubber Company
American Axle & Manufacturing Holdings Inc.
Fuel Systems Solutions, Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
AMER AXLE & MFG (AXL): Free Stock Analysis
COOPER TIRE (CTB): Free Stock Analysis Report
FUEL SYSTEM SOL (FSYS): Free Stock Analysis
GOODYEAR TIRE (GT): Free Stock Analysis
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