Apollo Tyres shares gain over 8% after Cooper loses court bid on merger

Apollo Tyres shares gain over 8% after Cooper loses court bid on merger

Stock in Apollo Tyres Ltd jumped more than 8 per cent in early morning trade on Tuesday, a day after a US court dismissed Cooper Tire & Rubber Co plea seeking a directive to force the Indian tyre maker to complete their proposed $2.3 billion merger deal.

The Delaware Supreme Court on Monday dismissed Cooper's plea against a previous court ruling that Indian tyre maker was fulfilling its commitment of reaching new contract terms with workers' unions at Cooper's Ohio and Texas-based plants.

In June this year, Apollo had agreed to pay $35 per share of Cooper, but it now wants to pay less than that because of demands by workers' unions at Cooper plants and troubles at the US tyre maker's venture in China.

The potential merger will allow Apollo to become the world's seventh-largest tyre maker, but investors are worried that the deal would lead to inflate the company's debt levels.

Under the terms of the merger deal the Indian tyre maker can walk away from the deal on 31st of December. Angel Broking's Mayuresh Joshi said that traders are purchasing Apollo shares on the assumption that the tyre maker will walk away from the merger deal.

As of 09.30 a. m., shares of Apollo Tyres were trading at Rs 91.55 apiece on the Bombay Stock Exchange, at a gain of 8 per cent from yesterday's closing price.

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