Onkar Kanwar-led Apollo Tyres Ltd has won the legal case over a potential liability of $112.5 million break-up fee to be paid to US-based Cooper Tire over a $2.5 billion deal which came unstuck last year.
In a judgment last weekend, a US court ruled in favour of Apollo’s motion for entry of a declaratory judgment, as per a stock market disclosure.
“This ruling vindicates the company’s consistent stand that even as Apollo made exhaustive efforts to complete the deal, Cooper failed to comply with its contractual obligations because it was unable to control its largest subsidiary,” it said in the statement.
As per the ruling, Cooper didn’t satisfy the closing conditions of the deal, mainly due to labour strife in the US and opposition to the purchase by Cooper’s Chinese joint-venture partner, Cooper Chengshan (Shandong) Tire Co.
Last year in June, Apollo Tyres said is it acquiring New York Stock Exchange-listed Cooper for $2.5 billion in an all-cash deal, which could have made it the world’s seventh largest tyre maker.
However, the proposed deal was hit by two developments, including a pending settlement with labour union United Steelworkers (USW) and troubles at Cooper’s Chinese venture.
The deal was finally scrapped late last year after a US court dismissed Cooper Tire’s bid to force Apollo Tyres to complete its pending deal to buy out the American tyre maker.
Recently Apollo Tyres Ltd was looking to raise up to Rs 1,200 crore ($200 million) through a mix of equity issues and non-convertible debentures in one or more tranches.
Last year, Apollo Tyres sold its Durban-based unit Apollo Tyres South Africa Pty Ltd (ATSA) for $60 million (Rs 335 crore) to Sumitomo Rubber Industries Ltd.
Shares of Apollo Tyres were trading at Rs 228 each, up 4.28 per cent on BSE in a weak Mumbai market on Monday at 12.44 PM.
(Edited by Joby Puthuparampil Johnson)