Cooper Tire & Rubber Co. said Friday it reached an agreement with its Chinese joint venture partner and the labor union at their shared facility, Cooper Chengshan (Shandong) Tire Co., or CCT.
Cooper owns 65 percent of the plant, but its partner put a halt to a $2.2 billion merger between Cooper and Apollo Tyres late last year after it went on strike and refused to make Cooper-branded tires.
The 5,000 employees there also prevented Cooper management from getting to plant offices or allow them to access financial information. Cooper has been unable to file its required financial reports because of that move
Cooper terminated the merger in December.
In Cooper’s agreement with Chengshan Group – Cooper’s JV partner – the Chinese company has the first option to buy Cooper’s 65 percent stake or sell its 35 percent stake to Cooper. If Chengshan decides to do neither, Cooper can buy Chengshan’s 35 percent share.
An independent valuation firm will first determine the fair market value of CCT.
The purchase options are conditional on Cooper reporting its financial results within a specified timeframe. In the event that neither party chooses to buy the other’s interest, the joint venture will continue to operate as is.
If Chengshan does buy Cooper’s stake, Cooper will continue to have Cooper-branded products, including truck and bus tires produced there for a minimum of three years.
“With this agreement, Cooper gains certainty regarding sustained normal operations at CCT as well as a defined process for determining the long-term ownership of the joint venture based on a fair market value,” said Cooper Chairman, CEO and President Roy Armes.