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Cooper Tire could sell stake in Chinese joint venture to partner
Cooper Tire & Rubber Co said it could sell its 65 percent stake in its Chinese joint venture to partner Chengshan Group Co Ltd, clearing the way for the U.S. tire maker to look for a buyer for itself.
Chengshan Group protested against Cooper’s deal to sell itself to India’s Apollo Tyres Ltd by locking out Cooper management and halting production of Cooper-branded tires at the Chinese facility, Cooper Chengshan Shandong Tire Co Ltd (CCT).
Production resumed earlier this month after the merger fell through.
“If Cooper sells its interest in CCT to Chengshan ... Cooper will have added flexibility to enter into acquisitions,” Chief Executive Roy Armes said in a statement on Friday.
Chengshan Group had been exploring a bid for Cooper when Cooper struck the Apollo deal, the company told a court in November.
Cooper’s shares rose as much as 3 percent in premarket trading on Friday after the fourth-largest U.S. tire maker said Chengshan Group will have the first option to either buy Cooper’s 65 percent interest in CCT or to sell its 35 percent interest to Cooper.
If Chengshan Group determined not to exercise either option, Cooper had the right to purchase Chengshan’s stake in the joint venture, the company said.
The venture would continue as currently structured if neither company decided to buy the other’s interest, Cooper said.
The options are conditioned on Cooper reporting its financial results within a “specified timeframe”, the company said.
The company has already delayed reporting its third-quarter results, scheduled in November, after the Chinese facility stopped entering financial data into the company’s systems. It said in January it was premature to determine when it would resume regular financial reporting.
If Chengshan Group elected to buy Cooper’s stake in the venture, the plant would have to continue production of Cooper-branded products for a minimum of three years, the company said. (Reuters)
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