Apollo Tyres calms investors as shares fall
Two days after announcing its takeover of US-based Cooper Tire and Rubber Co, Indian tyre major Apollo Tyres sought to calm investorsindia Updated: Jun 14, 2013 21:06 IST
Two days after announcing its takeover of US-based Cooper Tire and Rubber Co, Indian tyre major Apollo Tyres sought to calm investors, saying that Apollo India has taken a debt of only $450 million (Rs 2600 crore) of the total $2.5 billion (Rs 14425 crore) required for the acquisition.
However, the company’s stock fell 5.6% to Rs 65 on the BSE on Friday, as investors felt the size of the debt was too large and Apollo had bit more than it could chew. Shares fell 25% on Thursday and have tanked 30% since the announcement of the deal.
"Cooper is a very healthy company and has very good margins. Bulk of the debt is on its books," said Neeraj Kanwar, managing director, Apollo Tyres. "There is hardly any risk in this deal."
"The market has reacted adversely because the announcement of the acquisition was very sudden," said Sunam Sarkar, chief financial officer, Apollo Tyres. "We have created a ring fence around Apollo India and insulated it from all risks. Share prices will stabilise in time."