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The Story of Apollo and Mr. Che


Forbes has an incredible story of how the Apollo Tyres acquisition of Cooper fizzled out. (HT Nikhil Pahwa of Medianama)

It seems the story had a twist – the Twist of Mr. Che Hongzhi . He owned the remaining 35% of Cooper Chengshan, the Chinese tyre plant of the company that was responsible for a substantial portion of Cooper’s profit. Che, it seems, wasn’t enthralled by the Apollo acquisition move.

On June 15, three days after the announcement, Che was in the US at the invitation of Cooper, with a bid of his own to acquire the company. He bid $38 per share, $3 more than Apollo had. Cooper had its own reasons to believe that Che’s financing sources were not as committed as Apollo’s. Despite the higher bid, it decided to go ahead with Apollo. Che left the US feeling insulted.

Apollo says they didn’t know about this. And matters with Che deteriorated when Neeraj Kanwar, the CEO of Apollo went to meet him in China. After this, the situation in China went really sour, with Cooper executives being denied access to their own Chinese factory premises. Later, Mr. Che would demand $500 million to sell out, a price unacceptable to Apollo.

The other issue was with United Steelworkers (USW), a union of auto workers at Cooper’s Ohio plant. USW had wanted to increase wages at Cooper’s plants in the US, and this was the background:

Cooper Tire and USW don’t have a history of getting along well. During the economic downturn of 2008, when fuel prices shot up and US car sales came to a screeching halt, Cooper found itself in the middle of a crisis. To tide over the tough economic environment, it faced a tough decision to shut down one of its four plants in the country. That’s when 1,050 members of the USW union in Findlay, Ohio, agreed to give the company $30 million in concessions, in the form of pay cuts for new hires and reduced bonuses to keep the plant open. Subsequently, when the company’s fortunes improved, in October 2011, USW appealed to the management to increase wages. Cooper said that if the plant had to remain cost competitive, that was not possible. The workers were not happy. Starting late November 2012, the Findlay plant remained in lockout for three months.

Eventually, USW filed a suit and won the arbitration that said Apollo must finalize agreements with the unions at two of Cooper’s plants before Apollo could acquire them.

The interesting piece – both USW and Che demanded their pound of flesh for cooperating. It’s not really anymore about who was at fault; the matter is in court and is likely going to result in no real action against either party. But the point is: How much in control are you, of a company you think you own because you are a majority shareholder?

The chinese entity could prevent you from entering its premises, or deny you access to its financials and you can’t do anything because the Chinese part-owner is politically connected. Your agreement with a union allows them a say on whether there can be a change in control. It’s not just the shareholders and the bankers, it’s everyone.


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