Cooper Tire and Rubber Co. reports the fair market value for its Chinese plant to be US $440 million at the current exchange rate.
The valuation of Cooper Chengshan (Shandong) Tire Company Ltd. (CCT) was completed by an independent firm responsible for determining a fair market value on a stand-alone basis, excluding the value of trademarks and technologies licensed by Cooper to CCT.
The valuation is the option price.
Under the option agreement between Cooper and its partner, Chengshan Group Company Ltd.:
* Chengshan has the first option to elect, within 45 days, to purchase Cooper’s 65% interest in CCT for 65% of the option price, to sell its 35% interest in CCT to Cooper for 35% of the option price, or not to exercise either of these options;
* If Chengshan determines not to exercise either the put or call option, Cooper has the right to purchase Chengshan’s 35% interest in CCT for 35% of the option price; and
* In the event that neither party elects to purchase the other’s interest in CCT, the option agreement provides that the joint venture will continue as currently structured.
Further, should Chengshan purchase Cooper’s stake in the joint venture, Cooper will continue to have offtake rights with CCT agreeing to produce Cooper-brand products, including truck and bus radial tires, for a minimum of three years.
“We look forward to final resolution of the ownership of CCT as Cooper continues to pursue our growth plans for China,” says Chairman, Chief Executive Officer and President Roy Armes.
Bob Ulrich was named Modern Tire Dealer editor in August 2000. He joined the magazine in 1985 as assistant editor, and has been responsible for gathering statistical information for MTD's "Facts Issue" since 1993.