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.

Electric Car Maker Coda Wins Approval to Sell Assets to Fortress

Under the deal, Fortress group will pay $1.7 million in cash, and the remainder will come by way of a "credit bid," in which Fortress will bid for the assets of Coda using debt owed instead of cash.

Coda said in its May 1 bankruptcy petition that it is exiting the car business to focus on the development and sale of energy storage systems through its subsidiary Coda Energy.

"(The ruling) will allow us to emerge in a stronger position to develop our core technology, forge stronger relationships with our partners, and ultimately, enable us to execute our business plan in the growing energy storage sector," the company said in an emailed statement.

Earlier on Tuesday, two affiliates of the electric-car maker - Lio Energy Systems Holdings and Miles Electric Vehicles - filed for chapter 11 bankruptcy protection.

The case is in re Coda Holdings Inc, Case No. 13-11153, U.S. Bankruptcy Court, District of Delaware.

(Reporting by Mridhula Raghavan and Sakthi Prasad in Bangalore, and Paul Lienert in Detroit; Editing by Edwina Gibbs)

Electric Car Maker Files for Bankruptcy Protection

The filing with the federal Bankruptcy Court in Delaware will allow the Los Angeles company to get out of the auto sector and refocus on energy storage, a far less capital-intensive business. The company uses the same technology it used in cars to build systems for utilities and building operators to store power.

A group of lenders led by Fortress Investment Group plans to extend debtor-in-possession financing and will seek to acquire the company for $25 million through the bankruptcy process, Coda said in a statement.

Coda introduced its five-passenger electric car in California a year ago, delivering a range of 125 miles, or 200 kilometers, on a single charge.

The $37,250 vehicle was criticized for its no-frills styling, and its short history also included a recall because of faulty air bags.

Consumers have been slow to gravitate toward electric vehicles as a result of their high cost, and fears about their driving range.

Just three years ago, Coda was one of an emerging crop of California start-ups, including Fisker Automotive and Tesla Motors, seeking to build emission-free electric cars to appeal to mass-market consumers.

Investors poured money into the sector, and Coda raised $300 million in equity from backers, including Aeris Capital, the Limited Brands chief executive Les Wexner, and former Treasury Secretary Henry Paulson.

However, in 2012 the company withdrew its request for $334 million in federal loans like the ones Fisker and Tesla received.

As the allure of electric vehicles faded, Coda struggled to secure new private funding. Last year, Coda sought to raise $150 million but clinched just $22 million, according to a filing with the Securities and Exchange Commission.

Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. The maker of lithium-ion batteries for Fisker, A123 Systems, filed for bankruptcy late last year.

General Motors and Nissan Motor also invested heavily in electric vehicles.

Coda has about 40 active employees and expects to recall 50 furloughed workers. Emerald Capital Advisors is advising Coda on its restructuring, and Houlihan Lokey is its investment banker.