Cooper Tire calls off sellout
"It is time to move our business forward," said Roy Armes, Cooper chief executive officer.
"While the strategic rationale for a business combination with Apollo is compelling, it is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo and we have been notified that financing for the transaction is no longer available," Armes said.
Armes said Cooper must regain control of its joint venture Cooper Chengshan (Shandong) Tire Co. factory in Rongcheng, China, which has more 5,000 workers who can build 15 million tires per year.
The Chinese have protested the merger since early summer by withholding financial information, blocking Cooper executives from the plant, and refusing to manufacture Cooper-brand tires.
"The issues (in China) were driven by the merger agreement and, with the agreement now terminated, Cooper is working independently to restore normal operations ... including obtaining the information needed for Cooper to resume regular financial reporting as soon as possible," Armes said.
Once resolved, he said, "Cooper will be in a position to address additional options for the deployment of capital targeted at returning value for our stockholders," Armes said.
The company then would be "open to all potential paths," Brad Hughes, Cooper's chief financial officer, said during a webcast Monday. He would not elaborate.
Cooper has yet to file a third-quarter financial statement with the U.S. Securities and Exchange Commission because of the lack of information from China.
Apollo, which would have become the world's seventh-largest tiremaker by absorbing Cooper, fired back on Monday.
"While Cooper's lack of control over its largest subsidiary and inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the last several months," Apollo said.
"However, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both companies and their shareholders. Cooper's actions leave Apollo no choice but to pursue legal remedies for Cooper's detrimental conduct," it said.
Armes predicted Cooper, the 16th-largest tiremaker, will thrive on its own.
"Our business model is strong," Armes said, "and, despite the challenges this year, we are coming off record operating profit through the first half of the year and expect to continue to be profitable for the second half, ending the year with a strong balance sheet."
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