Apollo-Cooper Breakup: Winner is Morgan Stanley!

Can’t make this stuff up. Morgan Stanley, that was acting as one of the financial advisers to Apollo, ended up being the ultimate winner in the whole kerfunkel.


On just the 2.7M shares it bought in July, it ended up making Rs.104M in 6 months. So, did they bet on the collapse of the very deal that they were advising? Smells funny…

Morgan Stanley buys 0.5% stake
Morgan Stanley Asia sells 46.50 lakh shares of Apollo Tyres

Apollo Tyres: Buyer’s Remorse, Part III

Apollo Tyres: Buyer’s Remorse, Part III

A Delaware court rejected an appeal by Cooper Tire & Rubber Co. (CTB) to force a $2.5 billion takeover by Apollo Tyres. Apollo wanted to cut its $35-a-share offer by as much as $9, citing the labor issues.

The move puts the deal’s fate back in the hands of a lower state court. If Cooper doesn’t get a ruling in its favor by Dec. 31, Apollo can terminate the contract.

Cooper is still trying to resolve a lockout at its Chinese factory and remains unable to deliver updated financial statements to Apollo, which says it needs the information to sell bonds to pay for the deal. As an alternative to a settlement or paying what it originally agreed, Apollo could hand over a $112.5 million “reverse breakup fee” to walk away.

Meanwhile, CTB shares plunge in NYSE:

Not sure how this will play out but the biggest question is why are these issues coming to light 6 months after the deal was announced? Isn’t it the job of M&A advisers to dig up these things? Morgan Stanley and Deutsche Bank served as financial advisors to Apollo. If these issues were known before hand, as CTB alleges, then what was the Apollo board thinking? Isn’t this also a failure on part of the board to supervise its CEO?

I would avoid Apollo Tyres purely based on the colossal supervisory failure of both the management and the board. What is to stop these jokers from doing this all over again?

Apollo Rises After Court Rejects Cooper Appeal on Deal
Court Dismisses Cooper Tire Appeal of Ruling on Stalled Takeover
Apollo Tyres to Acquire Cooper Tire & Rubber Company
Apollo Tyres: Buyer’s Remorse
Apollo Tyres: Buyer’s Remorse, Part Deux

Apollo Tyres: Buyer’s Remorse, Part Deux

We had written about Apollo Tyre’s acquisition of US based Cooper Tyre & Rubber here. It looks like the delay is causing Cooper to shit the bed…

Cooper Tire says in a new court filing that Apollo Tyres still doesn’t have an agreement in place with the United Steel Workers. The company also says it doesn’t know for sure when its Q3 financials will be finished due to issues it can’t control. (SA)

cooper tire chart

While the market seem to like Apollo Tyer’s trying to back out of the deal…


Stay tuned!

Apollo Tyres: Buyer’s Remorse

Back in June this year, Apollo Tyres decided to buy US based Cooper Tyre & Rubber (CTB) for more than $2.5 billion, or $35 a share. Apollo was required to use its “reasonable best efforts” to get consents from any parties, like the steelworkers and its Chinese JV partner, whose approval is needed. In the meantime, the markets did not wait to show its hatred of the deal.

Apollo Tyres:

Apollo Tyres price chart


Cooper Tyre & Rubber:


Turns out that CTB has an underfunded UK pension scheme, which has only about two-thirds of the cash it needs to pay its promised pension benefits (a shortfall of £76.5m as at December 2012). And going into the deal, CTB’s management did not disclose that its Chinese partner had flirted with making a bid for the company. The pissed-off Chinese JV partner then organized a strike, put guards at the door and refused to allow Cooper and Apollo access to its financials.

The shit-show doesn’t end there. Morgan Stanely and other bankers involved in the deal have been unable to find buyers for the bonds that were supposed to finance the deal.  Apollo was planning to borrow more than $2.3 billion to pay for Cooper’s shares, and had plans to finance its $450 million equity slice as well.

Looks like the only option for Apollo is to stall for long enough that CTB is forced to file third-quarter financial statements. At which point it can try and wriggle out of the deal saying that key financial information was not disclosed during the time of the deal. However, CTB is having none of it. The company has dragged Apollo to court in its attempt to make it sign on the dotted line.

The question is what is Apollo going to do if it is instructed by the court to complete the deal but can’t find the financing promised by its banks? Interesting days ahead…