Domestic tyre major Apollo Tyres has pulled off India’s biggest acquisition in the automotive space, buying out US based Cooper Tire and Rubber Company for $2.5 billion (Rs 14,500 crore). The deal, the sixth biggest by an Indian firm, catapults Apollo to the seventh slot among global tyre makers, with a combined revenue of over Rs 35,000 crore.
This significant acquisition gives the Delhi-based company founded by late Raunaq Singh presence in two new markets, China and the US, which are the world's top two markets for automobiles.
The deal has been approved by the boards of directors of both companies in which Cooper stockholders will receive $35 (Rs 2,030) per share in cash. It represents a 40% premium to Cooper’s 30-day volume-weighted average price, and is expected to deliver value creation benefits from increased operations, joint sourcing and product optimisation of R465-700 crore per annum at the operating margin level.
"It provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” said Onkar S Kanwar, chairman, Apollo Tyres Ltd. “The combined company will be uniquely positioned to address large, established markets, such as the US and the EU, as well as the fast-growing markets of India, China, Africa, and Latin America. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry."
The deal is expected to be closed within the second half of this year. After that Cooper will become privately-held and no longer trade on the NYSE.