But Cooper instead entertained a bid by India-based Apollo Tyres Ltd.
Then the ball (or tire) went downhill from there. The 5,000 workers at Cooper Chengshan Tire Co. in eastern China in July went on strike, refusing to manufacture Cooper-branded tires. They also prevented Cooper management from getting to their offices and accessing information. That, despite Cooper having a 65 percent majority interest in the joint venture.
The Chengshan Group said they didn’t approve of the Apollo merger, citing cultural differences and concerns with the company’s ability to pay the debt on the $2.5 billion deal.
But maybe a spurned merger offer to their JV partner, Cooper, had a lot to do with that, too?
The merger offer was revealed in Delaware Chancery Court Tuesday, where a judge is deciding on Cooper’s lawsuit asking it to force the merger with Apollo.
Cooper accuses Apollo of dragging its feet; Apollo says Cooper hasn’t provided the financial information it needs to go though with the merger, and has asked to lower its bid by as much as $9 from its original $35-per-share offer. It also said Cooper has lost control of its CCT operation in China. Cooper said Apollo knew the risks when it entered merger talks.
And to add to the merger troubles, an arbitrator ruled in September that Cooper’s two U.S. plants in Findlay, Ohio, and Texarkana, Ark., could not be sold until a labor agreement had been reached with the United Steelworkers union, which represents workers at the two plants.
Workers at Cooper’s Tupelo plant are not unionized.
Last week, Cooper said it had reached a tentative deal with the USW, pending approval by both USW workers and Apollo. The deal is good only through mid-November. Apollo called it a last-minute “stunt.”
Judge Sam Glasscock III will continue hearing testimony through Thursday and is expected to make a ruling.
Here are some additional details from Tuesday’s hearing, courtesy of Reuters:
Armes said that Chengshan Group had been in talks about making its own bid for the Findlay, Ohio-based company when Cooper agreed to a deal with Apollo.
Armes said he worked with advisors from Apollo to work out the problems in China and thought things were going well until an August 27 email from Neeraj Kanwar, Apollo’s vice chairman. The message raised the possibility the Chinese problems could threaten the deal’s financing.
“As I recall I was at first surprised and confused,” said Armes, who said just three days earlier Kanwar’s tone was friendly. “It seemed somewhat contradictory.”
A few weeks later, an arbitrator issued an injunction preventing the deal from closing until a new labor deal had been reached with the United Steel Workers.
Armes said he was confident that an agreement would be reached, but just days before Cooper shareholders were to vote to approve the sale, Kanwar called to say a labor agreement would cost up to $125 million. The Indian company wanted to cut the deal price by as much as $2 per share.
“I was offended,” said Armes. As he saw it, Apollo was asking Armes’s shareholders to pay a very steep price that was allegedly being demanded by unions at the company’s plants. Cooper has taken the position that the risk of labor problems should have been part of the price Apollo negotiated.