DealBook: Indian Tire Maker to Buy Cooper Tire for $2.5 Billion

Mark Duncan/Associated PressCooper Tire, based in Ohio, said it would continue to recognize its labor unions.

11:40 a.m. | Updated

One of India’s largest tire makers, Apollo Tyres, announced a deal on Wednesday to acquire the Cooper Tire and Rubber Company for $2.5 billion in cash.

The acquisition would give Apollo a major foothold in the United States, the world’s second-largest auto market after China. Cooper, which focuses on passenger and light- and medium-truck replacement tires, is the fourth-largest tire maker in North America. Its brands include Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

It would be the second-biggest acquisition of an American company by a buyer in India, according to Thomson Reuters data, topped only by the $5.8 billion deal (including debt) for aluminum producer Novelis by Mumbai-based Hindalco Industries in 2007.

Under the terms of the deal, Cooper shareholders will receive $35 a share in cash – a 42.5 percent premium to its closing stock price on Tuesday and a 40 percent premium to Cooper’s 30-day volume-weighted average price. The Economic Times of India reported in October that the two companies were near a deal.

In late morning trading on Wednesday,, shares of Cooper were up more than 40 percent, at $34.54.

The combined company will be the seventh-largest tire company in the world, with $6.6 billion in total sales.

“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,” Onkar S. Kanwar, chairman of Apollo, said in a statement.

Cooper, based in Findlay, Ohio, has its origins in a business founded in 1914. As of the end of last year, it employed 13,550 worldwide. The company said it would continue to recognize its labor unions and honor the terms of collective bargaining agreements.

Apollo, based in Gurgaon, India, near Delhi, was founded in 1972. It has plants in India, the Netherlands and South Africa.

Morgan Stanley and Deutsche Bank and the law firms Sullivan & Cromwell and Amarchand & Mangaldas & Suresh A. Shroff & Company advised Apollo. The investment firm Greater Pacific Capital acted as strategic and financial adviser to Apollo.

Bank of America Merrill Lynch and the law firm Jones Day advised Cooper.