Cooper Tire shareholders approve $2.5 bn deal with Apollo Tyres

US-based Cooper Tire & Rubber Co's shareholders have approved its sale to Apollo Tyres, clearing the decks for one of the largest US acquisitions by an Indian firm.

On June 12 this year, Apollo Tyres had announced that it would acquire Cooper Tire & Rubber Company in an all-cash transaction valued approximately at Rs 14,500 crore ($2,5 billion).

The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high growth end-markets across four continents.

"We are pleased stockholders endorsed this compelling transaction (Cooper's sale to Apollo tyres), which will create a $6.6 billion leader in the tyre industry with a strong global footprint that includes a presence in the world's largest tire market of North America as well as in the fastest growing geographies of India and China," Cooper Chairman, Chief Executive Officer and President Roy Armes said in a statement on Monday.

When finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world, it added.

Approximately 78 per cent of Cooper's outstanding common shares were voted, with more than 48 million shares voted in favour of the merger, representing approximately 96 per cent of Cooper's voted shares, the company said.

Apollo Tyres, meanwhile, has said of a total loan of $2.5 billion to fund the acquisition, the Indian arm had taken a loan of only $450 million. The major portion of debt of $2.1 billion would be leveraged on cash flows of Cooper and Vredestein, the company's Netherlands-based arm.

Apollo's management also clarify that the move would not load its Indian operations with excessive debt.

As part of the deal, Apollo Tyres will take over the operations of Cooper, including eight plants and 14,000 employees in different parts of the world.

The American firm is the 11th largest tyre maker in the world with a revenue of over $4 billion.

"In terms of tyre production, Apollo's capacity will more than double from 1,500 tonnes per day to 3,500 tonnes per day," Apollo Tyres Vice Chairman and Managing Director Neeraj Kanwar had said in a conference call.

Cooper would be Apollo's third major overseas acquisition after taking over Dunlop South Africa for Rs 290 crore in 2006, which it has sold to Japanese Sumitomo Rubber Industries for $60 million (about Rs 340 crore) last month. In 2009, Apollo acquired Netherlands-based winter-tyre maker Vredestein Banden BV for an undisclosed sum.