AKRON—The Delaware Chancery Court has ruled against Cooper Tire & Rubber Co. in Cooper's bid to recoup a $112 million breakup fee related to the failed $2.5 billion merger deal with India's Apollo Tyres Ltd.
In a statement, Apollo Tyres said the “ruling vindicates our consistent stand that even as Apollo Tyres made exhaustive efforts to complete the deal, Cooper failed to comply with its contractual obligations because it was unable to control its largest subsidiary.
“This led it to hastily litigate and ultimately led to the failure of a transaction that would have benefitted Apollo and Cooper's shareholders.”
Delaware Chancery Court Judge Sam Glasscock III ruled late last week that Cooper had not satisfied the closing conditions of the deal, and therefore the breakup fee terms were negated. The case has been under review since Jan. 27 when the court ruled it would proceed with a decision on the Apollo entities' motion for declaratory judgment.
A sticking point in the proposed Cooper-Apollo merger was a labor action at CCT in China that led to the suspension of production of Cooper-brand products and a refusal by management there to share pertinent financial information.
In his Oct. 31 opinion, Chancery Judge Sam W. Glasscock III remarked on the complexity of the Cooper-Apollo case.
“Due to the convoluted procedural posture of this case, the parties disagree on what is left for me to decide,” Judge Glasscock wrote.
He stressed, however, that in any one of the points Apollo raised in its briefs, it was apparent that Cooper was unable to satisfy all conditions to closing the merger deal.
“Among other reasons, acquisition of Cooper was attractive to Apollo because it would provide Apollo an entrée into the Chinese market,” Judge Glasscock wrote. “A significant part of Cooper's business was its majority ownership of an affiliate, a Chinese tire manufacturer, Chengshan Cooper Tires (CCT).”