Valuation set for Cooper’s Chinese plant

By LOU WILIN
STAFF WRITER

Cooper Tire & Rubber Co.’s partnership with China’s Chengshan Group is worth $440 million, according to an independent valuation firm.

That valuation announcement gives Chengshan Group 45 days to decide whether to end or possibly mend its fractured partnership with Cooper Tire.

The partnership suffered in 2013 when the Cooper Chengshan Tire factory and its unionized workers sabotaged the proposed sale of Cooper Tire to Apollo Tyres of India.

Chengshan Group may either buy Cooper Tire’s 65 percent interest in the business for $286 million; sell its 35 percent share to Cooper for $154 million; or do nothing.

If Chengshan does nothing, then Cooper Tire may buy Chengshan’s 35 percent interest.

If neither party elects to buy the other’s interest in Cooper Chengshan Tire Co., then the partnership will continue as currently structured.

The steps for resolving the future of the partnership were agreed to by both companies.

The partnership fractured last year when the Chinese plant stopped producing Cooper-brand tires and withheld the plant’s financial information from Cooper Tire leaders. That prevented lenders from releasing financing that Apollo Tyres needed to buy Cooper.

Since the Apollo deal unraveled, the Cooper Chengshan plant has resumed production of Cooper tires and is releasing financial results.

“We look forward to final resolution of the ownership of (Cooper Chengshan Tire Co.) as Cooper continues to pursue our growth plans for China,” said Roy Armes, chief executive officer of Cooper Tire. “Regardless of who owns (Cooper Chengshan Tire Co.), Cooper is committed to continuing to build on the strong foundation we have in place in China by expanding our brand awareness and distribution network, and by growing profitable sales in the region through the original equipment channel and replacement tire market.”

If Cooper sells its Cooper Chengshan interest, it will gain a war chest of $286 million to invest elsewhere, said Keith Moore, managing director and event-driven strategist for MKM Partners, Stamford, Connecticut.

And the Chinese plant will have to keep making Cooper-brand products for at least three years, Cooper said.

If Cooper buys Chengshan’s minority interest, worth $154 million, Cooper will have an experienced team in place to continue its growth strategy, Armes has said.

Either way, Cooper will keep employing sales, marketing and technology forces in China, and retain its other Chinese factory, Cooper Kunshan Tire Co. outside Shanghai, Armes has said. Cooper is the sole owner of that one.

Wilin: 419-427-8413
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