Apollo Tyres soars 9% after Cooper loses court bid on merger

Shares in Apollo Tyres surged as much as 8.8 per cent on Tuesday after Cooper Tire & Rubber Co on Monday lost its court bid to force Apollo to complete their proposed $2.3 billion merger.

The Delaware Supreme Court dismissed Cooper's appeal against an earlier ruling that Apollo was meeting its obligations to reach new contract terms with unions at Cooper plants in Ohio and Texas. (Read the full story here)

Apollo, which would become the world's seventh-biggest tire maker after the merger, wants to pay less than the $35 per share agreed in June because of demands by unions at Cooper plants and disruptions at Cooper's venture in China.

Under the terms of the merger Apollo can walk away from the deal on December 31.

Mayuresh Joshi of Angel Broking told NDTV that traders are buying Apollo Tyres shares on the assumption that the company will walk away from the deal.
 
"The deal to buy Cooper is a high leveraged buyout for Apollo, which is already sitting on debt of Rs 1,600 crore. If the deal does not get through, it's a positive for the stock," Mr Joshi added.

Angel Broking has a target of Rs 125-130 on Apollo in case the deal does not go through.

As of 09.30 a.m., the stock traded 8 per cent higher at Rs 91.55 on the BSE as against 0.5 per cent gain on the Sensex. (Track stock)

(With inputs from Reuters)