Shares of Apollo Tyres jumped 5.13 per cent on the NSE to ₹230.35 on Monday following a judgment in its favour in a US court.

The case relates to Apollo Tyres’ failed acquisition bid for Cooper Tire & Rubber Co.

Last June, Apollo had announced that it will acquire Cooper Tire in an all-cash deal for about ₹14,000 crore ($2.5 billion). But the deal ran into rough weather due to troubles at Cooper’s Chinese venture and a pending settlement with labour union United Steelworkers.

Deal termination

The deal was finally terminated on December 31, 2013, 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.

Last week, Delaware Chancery Court Judge Sam Glasscock III in a judgment said Cooper failed to comply with its contractual obligations.

Apollo Tyres on Monday, in a disclosure to the exchanges, said: “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.” This led it to hastily litigate and ultimately led to the failure of a transaction that would have benefited the shareholders of both Apollo and Cooper, Apollo Tyres said.

Uncertainty ends

According to an analyst with a Mumbai-based brokerage, the uncertainty with regard to the quantum of exit penalty has ended with this ruling. “Today’s gain was just a momentary reaction to the judgment,” he added.

A recent Deutsche Bank report, which maintained a ‘buy’ call with a price target of ₹235 said the drivers of Apollo’s business outlook are — strong franchisee in domestic truck tyres, which should witness a cyclical recovery, and market share gains in the high-margin European market.

Related Topics
comment COMMENT NOW