After hearing final arguments Friday, Judge Sam Glasscock III disagreed with Cooper’s contention that Apollo was dragging its feet in closing the merger, which had originally been set for Oct. 4. Glasscock also rejected Cooper’s claim that Apollo was suffering buyer’s remorse.
“We are pleased that the Delaware Court has found that Apollo is not in breach of its merger agreement with Cooper Tire,” Apollo said in a statement “Furthermore, the Court found that Apollo has used ‘reasonable best efforts’ to negotiate with the USW and that, contrary to Cooper’s claims, ‘nothing in Apollo’s conduct indicates buyer’s remorse.’ Apollo continues to believe in the merits of the combination and is committed to finding a sensible way forward.”
Cooper responded that it “is disappointed with the decision of the Delaware Chancery Court that Apollo did not breach its obligation to expeditiously reach an agreement with the United Steelworkers per the terms of the merger agreement. Cooper is assessing its options with respect to this decision and awaits the Court’s ruling on other open matters in this case.”
Cooper had filed suit asking the court to speed up the merger, accusing Apollo of dragging its feet. The merger hit a stumbling block when an arbitrator ruled in September that its plants in Findlay and Texarkana, Ark., could not be sold until a labor deal had been reached with the USW, which represents the workers there.
Cooper’s Tupelo plant is no unionized.
Last week, Cooper said it had reached a tentative deal with the union, a move Apollo said was a stunt.
Also at issue is Apollo accusing Cooper of losing control of its joint-venture plant in China, which stopped producing Cooper-branded tires in July and won’t allow Cooper management to review important information
If the merger isn’t finalized by Dec. 31, Apollo can avoid paying a $112.5 million reverse breakup fee. Cooper suggest Apollo is doing just that by delaying the merger. Apollo says it doesn’t have all the information it needs – thanks in part to the China plant troubles – to secure financing for the deal, which was originally set to be a $35-per-share cash offer for Cooper shares.
Cooper said Apollo asked for a lower price, given the troubles in China, but Cooper said Apollo knew about potential issues with the plant.
Shares of Cooper Tire fell $3.08 to $23.82 a share on Friday after the ruling, but rose in after-hours trading.