Cooper Tire Walks Out of Merger Pact With Apollo Tyres
In early trade on Tuesday, shares of Apollo Tyres Ltd gained 4 per cent after a deal to acquire U. S.-based Cooper Tire & Rubber Co fell through late last night.
On Monday, Cooper Tire said it was pulling out of the deal after being informed by the Indian tyre maker that financing was no longer available for a takeover. Both the companies have threatened legal action against each other.
Apollo shares hit a record high of Rs. 111.45 in pre-market trade. On Monday, shares of Cooper had also grown by 5.4 per cent after the announcement, closing at $24.2 on the New York Stock Exchange.
Apollo Tyres has rallied nearly 16% to Rs 117 which also hits record high on the NSE, following the termination of the merger agreement with Cooper Tire & Rubber Company (CTB).
Analyst at Angel Broking expects the ongoing litigation surrounding the deal to continue moving ahead.
Analyst said in a note, nevertheless, the termination of the deal is a positive development for Apollo Tyres given that the concerns regarding significant increase in leverage (to fund the acquisition) has been abated.
He added, however, clarity still is required to be sought on the break-up fee of US$112 million which was to be borne by Apollo Tyres for failure to conclude the deal.
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