Cooper Tire is appealing to the Delaware Supreme Court a ruling that Cooper hasn’t fulfilled all the conditions of its troubled merger with Apollo Tyre.
Over the weekend, Delaware Chancery Judge Sam Glasscock III said Cooper hasn’t met the merger conditions yet.
Cooper had sued Apollo to speed up the merger, saying the India-based company was dragging its feet. The merger originally was set to close in October.
On Friday, Glasscock said Apollo did not breach its obligations in dealing with the United Steelworkers union, a charge Cooper made in it suit. An arbitrator in September said a labor deal had to be worked out with the USW before two U.S. plants could be sold.
Cooper reached a temporary labor deal with the USW, a move Apollo has called a stunt.
Glasscock also said Cooper isn’t yet entitled to Apollo’s original $35-per-share offer.
According to Businessweek, Glasscock said “Cooper has failed to demonstrate a present entitlement to specific performance.”
Cooper is supposed to present its third-quarter earnings report Thursday, but there’s a lot of uncertainty over that since it’s joint-venture plant in China, the Cooper-Chengshan Tire Co., has effectively been on strike since July. The 5,000 workers there have refused to make Cooper-branded tires, and have not let Cooper management review any key financial or production data since then. That, despite Cooper having a 65 percent share in the joint venture.
The plant, which opened in 2006, is a huge international operation that’s key to the merger. Apollo even tried to buy it separately, to no avail. And in another twist, it was revealed last week Cooper’s Chinese partner, Chengshan Group, actually made a merger offer for Cooper before Cooper accepted Apollo’s offer
“Cooper has failed to demonstrate a present entitlement to specific performance,” Glasscock wrote.
He added that if “timely reporting of the third-quarter financials is completed, Cooper’s request for “specific performance will remain viable,” according to Businessweek.
Cooper said it was appealing the ruling and said the judge’s ruling “misconstrues the contract between Cooper and Apollo.
“There is one point on which all parties agree – it was the merger agreement itself that caused the issue with our CCT joint venture in China. Absent the agreement, CCT would have continued in full operation, performing well and making an important contribution to Cooper’s results.”
Cooper said it believes it has met all conditions for closing the merger.