India-based Apollo Tyres has signed an agreement to acquire the US-based Cooper Tire and Rubber for a cash consideration of approximately $2.5bn, or $35 a share, to enhance its presence in the US automobile market.
The transaction, which is expected to be immediately accretive to Apollo’s earnings, represents a 40 per cent premium to Cooper’s 30-day volume-weighted average price.
Apart from improved geographic presence and technological expertise, the deal will help Apollo to become a global leader in tire manufacturing and distribution business.
The combined firm is expected to become the world’s seventh-largest tire firm with a strong presence in high-growth end-markets across four continents. It is expected to deliver value creation benefits of approximately $80m-120m per year at the EBITDA level.
Neeraj Kanwar, vice chairman and managing director of Apollo, said, “The combined company’s diversified product offering will serve the passenger car, light and heavy truck, farm, and off-the-road vehicle segments.”
Onkar Kanwar, chairman of Apollo, said: “This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world.”
“The combined company will be uniquely positioned to address large, established markets, such as the US and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry.”
Roy Armes, chairman and CEO of Cooper, said: “This is a compelling transaction that is in the best interest of Cooper’s stockholders and offers attractive benefits to our customers and employees. We have watched Apollo’s successful transformation into a major global tire group, and have a great deal of respect for the company and its leadership.”
“Together, our two organizations have almost no geographic overlap and significant opportunities for growth. We share a commitment to innovation, quality, and customer service, as well as to the core values of safety, environmental sustainability, the development of our people and giving back to our communities. We look forward to working together to drive continued growth in a dynamic global tire business where increased scale and expanded manufacturing footprint help to ensure long-term success.”
Established in 1914, Cooper has an extensive distribution network and manufacturing infrastructure, and a particularly strong presence in North America and China.