By LOU WILIN
Without ruling on the case’s merits, Delaware Supreme Court on Monday dismissed Cooper Tire & Rubber Co.’s appeal of a lower court’s ruling that Apollo Tyres was making reasonable efforts to complete its purchase of Cooper.
The high court’s decision kicks back to the lower court’s Cooper lawsuit to force Apollo to buy it. Cooper claims Apollo is trying to get out of the $2.5 billion purchase announced by both companies last June. It has accused Apollo of using two excuses for not completing the deal. One is financial reporting and production sabotage at a tire plant in China, where Cooper’s Chinese partner opposes the sale to Apollo. The other is the lack of a labor agreement between Apollo and unionized workers in Findlay and Texarkana, Ark.
But Cooper so far has failed to convince Delaware Chancery Court Vice Chancellor Sam Glasscock III. He sided with Apollo last month, prompting Cooper’s appeal to Delaware Supreme Court.
However, Glasscock issued his ruling in a hurry, at Cooper’s request, and he left some claims by Cooper and Apollo unaddressed. Hence, with the case back in his court, Glasscock could still rule in favor of Cooper.
But time is running short. Under terms agreed to by both companies, either side can abandon the deal without penalty if the purchase is not completed by Dec. 31, and if the company walking away is not at fault. If Apollo backs out without a legitimate reason or is to blame for missing the Dec. 31 deadline, it would have to pay Cooper $112.5 million.
“To me, Cooper is a dead duck now,” said Keith Moore, managing director and event driven strategist for MKM Partners in Stamford, Conn.
Cooper is not conceding yet.
“Today’s action was not a decision on the merits of the issue on appeal, but instead was a procedural ruling that returns the case to the Delaware Chancery Court,” Cooper Tire & Rubber Co. stated. “Both Cooper and Apollo will return to the Chancery Court for resolution of the remaining issues in the case. Cooper believes Apollo has breached the merger agreement and we will continue to pursue our legal options as we work to protect the interests of our company and our stockholders.”
The Supreme Court dismissal came three days before it was scheduled to hear the case. Its terse announcement simply said it made a mistake in agreeing last month to hear the case.
Moore said Glasscock’s decision last month that Apollo was making the required effort to close the deal put a “huge burden” on Cooper in future court proceedings. He said last month that Glasscock’s ruling made it “highly unlikely” Cooper would succeed on appeal.
United Steelworkers Local 207L President Rod Nelson wishes the court fight would end and the companies would begin bargaining.
“I still think there is a possibility they could come to some kind of agreement if they sit down,” he said. “Nothing is going to happen through the court system.”
“We’re just interested in working for a contract that treats people like an asset and rewards people for their hard work and dedication,” he said.
Nelson views Apollo as that kind of company.
“They have the same values that we have had at Cooper in the past,” he said. In saying that, Nelson excludes Cooper’s current top management, he said.
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