The Cooper Tire-Apollo Tyre merger gets more interesting by the minute.
Over the weekend, the Delaware Chancery Judge reviewing Cooper’s lawsuit asking him to force Apollo to speed up its $2.5 billion merger said Cooper is the party that hasn’t met merger conditions yet.
If you’ll remember, Cooper said Apollo is dragging its feet on the merger, which originally was scheduled to close in October.
On Friday, the judge said Apollo did not breach its obligations in dealing with the United Steelworkers union, a charge Cooper made.
But in another twist to the story, Judge Sam Glasscock III said Cooper isn’t yet entitled to Apollo’s original $35-per-share offer.
According to Businessweek, Glasscock said “Cooper has failed to demonstrate a present entitlement to specific performance.”
Cooper is supposed to present its third-quarter earnings report Thursday, but there’s a lot of uncertainty over that since it’s joint-venture plant in China, the Cooper-Chengshan Tire Co., has effectively been on strike since July. The 5,000 workers there have refused to make Cooper-branded tires, and have not let Cooper management review any key financial or production data since then. That, despite Cooper having a 65 percent share in the joint venture.
The plant, which opened in 2006, is a huge international operation that’s key to the merger. Apollo even tried to buy it separately, to no avail. And in another twist, it was revealed last week Cooper’s Chinese partner, Chengshan Group, actually made a merger offer for Cooper before Cooper accepted Apollo’s offer
“Cooper has failed to demonstrate a present entitlement to specific performance,” Glasscock wrote.
He added that if “timely reporting of the third-quarter financials is completed, Cooper’s request for ‘‘specific performance will remain viable,’’ according to Businessweek.
This morning, Cooper said it was appealing the ruling and issued the following statement:
“Cooper believes that, with all due respect to the Vice Chancellor and the Court, the November 8 ruling misconstrues the contract between Cooper and Apollo. We are seeking a reversal of the ruling from the Delaware Supreme Court.
“While we dispute the November 8 decision and points expressed in the Vice Chancellor’s November 9 clarification letter, we are pleased it was confirmed that Apollo remains required to use its best efforts to reach an agreement with the United Steelworkers (USW). Cooper will continue to work toward closing the transaction that both parties agreed to on June 12, 2013.
“Cooper entered into the agreement with Apollo from a position of strength. Our company generated record sales and earnings in 2012 and continued to perform well with record earnings in Q1 and operating profit that was up in the first six months of 2013 compared to the prior year. Our joint venture in China was performing well with no labor or other unrest. We were not looking to be acquired, but our operating performance and growth-oriented strategic plan for the future attracted Apollo to Cooper.
“There is one point on which all parties agree—it was the merger agreement itself that caused the issue with our CCT joint venture in China. Absent the agreement, CCT would have continued in full operation, performing well and making an important contribution to Cooper’s results. Cooper’s highly respected brands, award-winning products, reputation for quality and customer service, and strong global footprint in the largest tire market of North America as well as the fastest growing market of China, makes our future one of opportunity.
“Overall, Cooper believes it has met its conditions for closing and we believe that the best way forward starts with Apollo advancing the agreement with the USW that is currently on the table.”