FINDLAY, Ohio—India's Apollo Tyres Ltd. is acquiring Cooper Tire & Rubber Co. for about $2.5 billion, the tire makers announced.
The deal will boost Apollo to seventh in global tire manufacturer rankings, with combined sales of $6.6 billion in 2012, the companies said. Cooper is the world's 11th-largest tire maker, and Apollo the 16th.
The all-cash transaction also will leave Goodyear as the only U.S.-headquartered producer of consumer and commercial tires not owned by a foreign-based company.
A wholly owned subsidiary of Apollo will acquire Cooper in a purchase unanimously approved by the boards of directors of both companies, the firms said. Cooper stockholders will receive $35 per share, which represents a 40-percent premium to Cooper's 30-day volume-weighted average price.
The companies said the combination will bring together manufacturers with highly complementary brands, geographic presence and technological expertise to create a global leader in tire manufacturing and distribution.
Apollo, founded in 1972, produces a line premium and mid-tier tires, and makes the flagship Apollo and Vredestein brands. Cooper, founded in 1914, manufactures premium and mid-tier tires worldwide through brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
The companies said the merger should deliver value creation benefits of about $80 million to $120 million annually at the EBITDA level. They said the ongoing benefits are expected to be fully achieved after three years and derived from operating scale, sourcing benefits, technology, product optimization, and manufacturing improvements.
The transaction is expected to be immediately accretive to Apollo's earnings. The deal should close in the second half of the year, assuming timely regulatory approvals and other customary closing conditions, as well as approval by Cooper's stockholders, the firms said.
After the deal is finished, Cooper will become a privately held company. The tire makers said it is expected Cooper will continue to be led by members of its current management team and operate out of its facilities located around the world, which includes three in the U.S.
Cooper will continue to recognize the labor unions and honor the terms of collective bargaining agreements presently in effect while generally maintaining compensation and benefit levels for non-union employees, the companies said.