Shares of Apollo Tyres Ltd today rose sharply by nearly 12 per cent after Cooper Tire & Rubber Co terminated its troubled USD 2.5-billion merger agreement with the Indian firm.
Apollo Tyres’ scrip opened the day on a positive note and as the trade progressed it further jumped 11.54 per cent to Rs 113 — its 52-week high on the BSE.
“The termination of the deal is a positive development for Apollo Tyres given that the concerns regarding significant increase in leverage (to fund the acquisition) has been abated,” Angel Broking said in a report.
“It is time to move our business forward. While the strategic rationale for a business combination with Apollo is compelling,it is clear the merger agreement both companies signed on June 12 will not be consummated by Apollo,” Cooper Chairman CEO and President Roy Armes said yesterday.
“We have been notified that financing for the transaction is no longer available. The right thing for Cooper now is to focus on continuing to build our business,” he said.
The announcement follows a Delaware Supreme Court ruling earlier this month in favour of Apollo in its spat over the proposed merger pact,which was announced in June this year.
In June,Apollo had announced it will acquire Cooper Tire & Rubber Co in an all-cash transaction valued at around USD 2.5 billion (nearly Rs 14,500 crore) and the merged entity was billed to become the seventh largest tyre maker in the world.