In a move that had been speculated about since last fall, India’s Apollo Tyre Ltd. is acquiring Cooper Tire & Rubber Co. in a $2.5 billion deal.

The two companies reported the transaction early this morning.

Once completed, the acquisition will create the world’s seventh largest tire company with combined global revenue of an estimated $6.6 billion, according to Tire Review data. And the combined company would have three major brands and a significant footprint that touches the U.S., Europe, South Africa, India and China.

Apollo Tyre would become the clear-cut leader of the fast-growing Indian tire industry, overcoming such local rivals as JK Tyre, Balkrishna Industries and others. And with the acquisition, Goodyear Tire & Rubber Co. will remain as the only independent, home-grown major U.S. tiremaker.

Talk of such a deal reached the surface last October when India’s Economic Times reported that Apollo Tyre was “in the process of acquiring” Cooper. That rumor had Apollo taking a controlling stake, in a deal that “could be in the range of $600 million to $800 million.”

A month later, the Economic Times reported that Apollo "put on hold its plans of going ahead with the acquisition" of Cooper, because it "did not get a favorable response” to its efforts to raise capital from “institutional investors who were worried about the end-use of the funds.”

Apparently those concerns have passed.

In the deal, Apollo will create a wholly-owned subsidiary to acquire Cooper in an all-cash transaction valued at approximately $2.5 billion. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cooper stockholders will receive $35 per share in cash, an estimated 40% premium to Cooper’s 30-day volume-weighted average price, the companies said.

The acquisition is expected to close in the second half of 2013, and Cooper will drop from the New York Stock Exchange as a privately held company.

“This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution,” the companies stated in a press release. “The combination is expected to deliver value creation benefits of approximately $80-120 million per annum at the EBITDA level. These ongoing benefits are expected to be fully achieved after three years and derived from operating scale, sourcing benefits, technology, product optimization, and manufacturing improvements.”

“This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” said Apollo chairman Onkar Kanwar. “Cooper is one of the most respected names in the tire industry, with an extensive distribution network and manufacturing infrastructure, and a particularly robust presence in North America and China. The combined company will be uniquely positioned to address large, established markets, such as the U.S. and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry.”

“This is a compelling transaction that is in the best interest of Cooper’s stockholders and offers attractive benefits to our customers and employees,” said Cooper chairman and CEO Roy Armes. “We have watched Apollo’s successful transformation into a major global tire group, and have a great deal of respect for the company and its leadership. Together, our two organizations have almost no geographic overlap and significant opportunities for growth. We share a commitment to innovation, quality, and customer service, as well as to the core values of safety, environmental sustainability, the development of our people and giving back to our communities. We look forward to working together to drive continued growth in a dynamic global tire business where increased scale and expanded manufacturing footprint help to ensure long-term success.”