Cooper Tire and Rubber, which is due to sell itself to India’s Apollo Tyres, is reviewing its options on how to respond to an arbitrator’s blocking of part of the $2.5 billion (Dh9.2 billion) deal on the grounds that it had been agreed without the consent of workers at two US plants.
The decision by the arbitrator, announced on Friday, to block sale of Cooper’s unionised Findlay, Ohio and Texarkana, Texas plants to Apollo is the second serious blow to the deal — the biggest takeover of a US company by an Indian one — since it was announced in June. Workers at a Chinese factory that Cooper partly owns — in China’s Shandong province — have gone on strike over the proposed deal.
Both Cooper and Apollo said over the weekend they would now hold discussions with the United Steel Workers, the union that brought the case.
Cooper had argued that a “successorship clause” in its contract with workers at the two factories to agree any change of control with the union did not apply to the Apollo transaction. The arbitrator, James Oldham, ruled that the clause did apply to a takeover and barred Cooper from selling the two factories to Apollo until it had reached agreement.
It is unclear how easily the USW could reach agreement with the companies. Both companies expressed continued confidence in their statements after the arbitrator’s ruling that the deal would still go ahead.
“We are disappointed with the arbitrator’s ruling,” Cooper said. “We are reviewing our options and look forward to working with Apollo and the union to continue discussions and resolve the matter.”
The two companies announced the $35 per share all-cash deal — which would create the world’s seventh-biggest tyremaker by revenues — in June. Neeraj Kanwar, managing director of Apollo, said at the time that the deal would allow his group to “de-risk” amid the slowdown in its core Indian market, where car sales have declined in recent months. Cooper is the fourth-largest tyre manufacturer by sales in the US, where car sales are rising sharply, and has a substantial European presence.
Apollo said it looked forward to working with Cooper and the USW to resolve the situation.
Cooper’s share price — which rose sharply when the deal was announced — has declined slightly from the offer price since the potential problems first emerged. It stood at $33.22 on Friday.