Further details of Apollo’s acquisition of Cooper Tire & Rubber Co. have been published by Indian brokerage house Angel Broking.
In its June 13 market outlook report, Angel Broking notes that Apollo Tyre’s acquisition of Cooper will be funded entirely through debt. Apollo, it elaborates, plans to form a new holding company in the Netherlands involving Cooper and Vredestein, which would raise $2.1 billion in debt via bonds.
The major portion of the debt will be backed by Cooper and Vredestein’s assets.
The remaining $450 million debt will be raised at Apollo’s Mauritius subsidiary and serviced by its standalone business, says Angel Broking.
The brokerage house adds that Apollo indicates Cooper’s current management team will be retained and it has no plans to close down any manufacturing facilities at the moment.
“We see the acquisition to be a good strategic fit for Apollo Tyres in the long run as it provides the company access to geographies like North America, China, Southeast Asia and Eastern Europe where it does not have a presence currently,” states Angel Broking in its June 13 report.
“Further, according to the management, the acquisition is expected to be value accretive from year one and the management expects synergies of $80-$100 million over a three-year period. While the acquisition will be positive for the company in the longer run, the near term challenge for the company would be to successfully integrate Cooper’s operations with itself.” (Tyres & Accessories)
