Apollo Tyres Ltd has agreed to acquire Findlay, Ohio-based Cooper Tire & Rubber for $2.5 billion to gain entry to the thriving American auto market.
Gurgaon, India-based Apollo will pay $35 per Cooper share, a 43% premium to the closing price on Tuesday. The companies expect to complete the deal in the second half of this year.
Bloomberg News calculates that the transaction will be the biggest takeover of an auto supplier since 2007. The sale also represents one of the biggest U.S. acquisitions ever by an Indian company. Cooper is America’s second-largest tiremaker after Goodyear Tire & Rubber Co.
Apollo aims to be among the top 10 global tiremakers by 2016. The company will nearly triple its $2.2 billion annual revenue by acquiring Cooper. Apollo also expects the deal to boost its pre-tax profit by $80 million-$120 million annually within three years of the merger.
The Indian company currently derives two-thirds of its revenue in its home market. About 70% of Cooper’s sales come from North America. Apollo says it plans to sell its own tires through Cooper’s U.S. dealer network and use its own outlets to distribute the Cooper tires abroad.
Apollo says it does not plan to reduce Cooper’s U.S. output. The American company’s management, which is expected to remain in charge, adds that it will honor its existing union