From 2010 to 2013, the number of Modern Tire Dealer 100 dealers who carry Cooper tires jumped from 40 to 54, a 35% increase. These 54 dealers represent 3,442 outlets, which means Cooper tires are sold at nearly 89% more locations in 2013 compared to 2010.
Apollo Tyres Ltd. believes the brand’s popularity will continue if Cooper Tire & Rubber Co. becomes part of their corporate family. Announced on June 12, Apollo’s offer to acquire Cooper is expected to close, assuming timely regulatory approvals and other customary closing conditions, as well as approval by Cooper’s stockholders, within the second half of 2013. The all-cash transaction is valued at approximately $2.5 billion.
The 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, according to a joint statement issued by the companies.
In a message to employees, Cooper Chairman, Chief Executive Officer and President Roy Armes said the merger is a positive step for the company, providing many benefits and growth opportunities. “This agreement is right for our company. Our decision was made from a position of strength. We were not looking to be acquired, but our outstanding performance and sound strategy attracted a great organization to us. Together, we will become the world’s seventh-largest tire company, and that is exciting.”
Apollo and Cooper complement each other in several ways. In his message to employees, Armes stated:
■ “Almost no overlap exists in manufacturing capacities. Apollo maintains plants in India, South Africa and Western Europe. When combined with our facilities in North America, China and Europe, including our Serbia facility in Eastern Europe, this impressive global footprint will put us in a strong competitive position among the industry’s top players.
■ “Both companies possess diverse product portfolios, with well-positioned brands respected for their quality and performance as well as the value they bring to customers. Apollo and Cooper both focus primarily on the replacement tire business. We also both maintain key original equipment relationships with auto makers. The majority of Apollo’s sales are in commercial truck and passenger car tires. The majority of our sales, as you know, are in passenger car and light truck tires and we have an emerging strength in commercial truck tires. So, we’re a good fit in terms of market segments.”
John Healy, an industry analyst for Northcoast Research in Cleveland, Ohio, and co-author of Modern Tire Dealer’s monthly Your Marketplace column, says that Apollo wanted a stronger presence in the U.S. tire industry, and the company knew it would be difficult to do it on its own. A merger with Cooper gives Apollo a jump start for growth in this market with a valuable partner.
“Even with the merger the company will be the seventh largest tire company,” says Healy. “It will not change the dynamics of the industry that much.” The companies had combined total sales of $6.6 billion in 2012.
Healy says the Cooper dealers he spoke with feel the merger will have minimal impact. “Apollo’s presence in the U.S. is nonexistent. I would not expect them to change anything in terms of brands that are available as well as how dealers buy, how they order and how they work with Cooper.”
Will foreign ownership affect a dealer’s ability to sell the Cooper brand? Healy does not think so. “A lot of brands becoming popular and prevalent in U.S. have outside U.S. ownership. Foreign ownership won’t hurt the appetite for Cooper brand.“
For more on Apollo’s bid to acquire Cooper, see MTD Editor Bob Ulrich’s interview with Roy Armes.
See also, When David buys Goliath
