WILMINGTON, Del.—Apollo Tyres Ltd. won the first battle, but its war with Cooper Tire & Rubber Co. is far from over.
On Nov. 8, the day after a three-day trial before the Delaware Chancery Court, Judge Sam Glasscock III made a partial bench ruling that Apollo had not breached the terms of its merger agreement with Cooper by asking for a purchase price that would shave at least $2.50 per share from the $2.5 billion deal, and perhaps as much as $9.
Four days later, Cooper announced it would appeal Glasscock's decision before the Delaware Supreme Court.
It remains to be settled whether Apollo tried to renege on a $35-per-share merger deal with Cooper, or if the U.S. tire maker forced Apollo to ask for a lower per-share price by misrepresenting its earnings outlook and ties with its Chinese subsidiary.
"Cooper entered into the agreement with Apollo in a position of strength," the Findlay, Ohio-based tire maker said in a press release.
Cooper generated record profits in 2012 and the first quarter of 2013, and operating profit was up in the first six months of 2013 compared with the same period in 2012, Cooper said. This was what attracted Apollo to make a bid for Cooper, the company said.
In its own statement, Apollo said it was pleased with Glasscock's ruling.
"The court found that Apollo had used "reasonable best efforts' to negotiate with the United Steelworkers union and that, contrary to Cooper's claims, "nothing in Apollo's conduct indicates buyer's remorse,' " Apollo said.
In a letter dated Nov. 9, the day after he issued his bench verdict, Glasscock said Cooper had until Nov. 14 to maintain its right to compel Apollo to complete the merger.