Apollo Tyres Announced Acquiring Cooper Tire & Rubber Company for 14500 Crore
Apollo Tyres on 13 June 2013 announced that it would acquire US-based Cooper Tire & Rubber Company in the all-cash transaction worth 14500 crore Rupees.
The completely-owned subsidiary of Apollo Mauritius Holdings decided to pay Cooper stockholders 35 dollar per share in the cash.
The combination of the two companies will together create the seventh largest tyre company of the world. This is the third crucial foreign acquisition of Apollo Tyres. The first two were Dunlop South Africa for 290 crore Rupees which took place in 2006 and Netherlands-based Vredestein Banden BV in the year 2009.
Consortium of four banks- Morgan Stanley, Deutsche Bank, Goldman Sachs and Standard Chartered will raise an amount of 2.5 billion US dollar of new debt for the Apollo to fund this acquisition.
Apollo Tyres at present does not operate in US, and it gets two-third of the overall revenue from India. Acquiring Cooper Tire & Rubber Company will allow Apollo in getting access to US market also. Cooper Tire & Rubber Company is said to be the 11th largest tyre company of the world in terms of revenue. Acquisition will also facilitate Apollo brand to get access to market in China.
The ongoing benefits of acquisition will be realised completely after 2016 and these will be realised from manufacturing improvements, operating scale, technology, sourcing benefits as well as product optimization.