Cooper Tire and Rubber Co.’s shares slumped Monday after the Delaware Supreme Court denied the company’s appeal of a lower court’s ruling that went against the Ohio-based company.
Last month, the Delaware Chancery Court ruled that Cooper had not met all the conditions of a $2.5 merger with India-based Apollo Tyre. The court said Cooper had not done enough to provide all the information that Apollo needed in order to secure financing for the deal and that Apollo had not breached its terms of the deal as Cooper had claimed.
Cooper appealed that decision to the state’s Supreme Court, which issued a“terse” one-page statement: “The court has concluded that this interlocutory appeal was improvidently accepted,” Justice Randy J. Holland wrote.
Cooper Tire shares fell 5 percent to $21.62 Monday, down $1.15. The stock has fallen 38 percent since its 52-week high of $34.79 reached shortly after the merger announcement.
Apollo and Cooper have been lobbing accusations at each other since October, shortly after Cooper shareholders approved the merger.
Cooper claimed Apollo was dragging its feet, while Apollo argued that Cooper had no control of its Chinese joint-venture plant. That plant, with 5,000 workers, has not been producing Cooper-branded tires since July, and management has not been able to access key information. Cooper was supposed to release its third-quarter earnings last month, but has not been able to ecause it can’t get all of its financial information from the Chinese plant.
Cooper said Apollo knew of the potential hazard involved with the Chinese plant, but Apollo said it was basically kept in the dark.
Cooper also ran into trouble in September when an arbitrator ruled that it had to work out a labor deal with the United Steelworkers at its Findlay, Ohio and Texarkana, Ark., plants before they could be sold to Apollo. Cooper’s 1,300-employee plant in Tupelo is not unionized.
Cooper apparently had worked out a temporary agreement with the USW, but Apollo said it was only a stunt.
The Supreme Court’s decision came ahead of what had been a scheduled hearing on Thursday. It’s not clear what Monday’s decision means to the merger. Neither company immediately responded to the ruling.
Cooper is seeking to finalized the deal before Dec. 31, or Apollo may be able to be released from the merger without paying a $112.5 million reverse breakup fee.