Apollo Tyres jumped 4.47 per cent to Rs 74.80 at 10:55 IST on BSE after a US judge ruled that the Indian firm did not breach its obligation to close its $2.5 billion buyout of US-based Cooper Tire & Rubber Company.
The company made the announcement during trading hours today, 11 November 2013.
Meanwhile, the BSE Sensex was down 152.35 points, or 0.74 per cent, to 20,513.80.
On BSE, 7.47 lakh shares were traded in the counter compared with average volume of 5.10 lakh shares in the past one quarter.
The stock hit a high of Rs 75.65 and a low of Rs 75.65 so far during the day.
The stock hit a 52-week high of Rs 101.50 on 8 May 2013. The stock hit a 52-week low of Rs 54.60 on 21 June 2013.
The stock had underperformed the market over the past one month till 8 October 2013, rising 1.49 per cent compared with the Sensex's 3.42 per cent rise.
The scrip had, however, outperformed the market in past one quarter, rising 16.14 per cent as against Sensex's 9.99 per cent rise.
The mid-cap company has an equity capital of Rs 50.40 crore. Face value per share is Re 1.
Apollo Tyres said that a partial ruling on 8 November 2013, by Judge Sam Glasscock, III, Vice Chancellor of the Delaware Court of Chancery found that Apollo is not in breach of its merger agreement with Cooper Tire & Rubber Company.
Furthermore, the Court found that Apollo has used reasonable best efforts to negotiate with the United Steel Workers (USW) and that, contrary to Cooper's claims, nothing in Apollo's conduct indicates buyer's remorse.
Apollo said it continues to believe in the merits of the combination and is committed to finding a sensible way forward.
On 12 June 2013, Apollo Tyres announced that it would acquire Cooper, a company listed on the New York Stock Exchange, in an all-cash transaction valued at approximately $2.5 billion.
Later, Cooper accused Apollo of intentionally delaying the transaction and had gone to the US court to expedite the transaction.
As per the terms of the bid, the deal can be terminated without any financial penalty after 31 December 2013.
Cooper in its filing with the court, on 4 October 2013, had blamed Apollo for delay in settling issues with some of its labour from USW union in the US plants.
The USW represents Cooper employees at facilities in Findlay, Ohio and Texarkana, Arkansas.
It said Apollo is also looking at reducing the deal price owing to labour issues at the company's US and China plants.
In its answer, Apollo had denied the allegations made by Cooper regarding the course of its negotiations with the USW and confirmed that it has worked diligently to reach a settlement with the USW to enable Cooper to overcome the USW injunction prohibiting Cooper from consummating the merger.
Apollo said that conditions precedent to closing had not been satisfied because the marketing period for the financing, central to Cooper's claims in its complaint, had never commenced and that Cooper has failed to meet its contractual obligations.
Cooper is the 11th largest tyre company in the world by revenue and it supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
The strategic combination of Apollo and Cooper will bring together two companies with highly complementary brands, geographic presence and technological expertise to create a global leader in tire manufacturing and distribution.
If finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world.
Apollo Tyres will announce Q2 results on 13 November 2013. The company's consolidated net profit rose 19.5 per cent to Rs 165.95 crore on 0.83 per cent growth in total income to Rs 3200.94 crore in Q1 June 2013 over Q1 June 2012.
Apollo Tyres manufactures tyres and tubes for cars, trucks, farm equipment and light commercial vehicles. The company also manufactures automobile flaps and retreading materials.
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