Exclusive! Roy Armes talks about Cooper-Apollo
Cooper Tire & Rubber Co. was not looking to sell the company to Apollo Tyres Ltd., but that's what happened.
Maybe it started a few years ago when Cooper approached Apollo about a possible off-take arrangement. At the time, Cooper was looking to add capacity.
Then a possible East European joint venture was discussed. Cooper also talked with Apollo about distributing Cooper tires in South Africa, in which Apollo has a strong presence.
"We were just looking at how we could collaborate as two companies, and take advantage of the... strengths we both offer," says Roy Armes, chairman, CEO and president of Cooper Tire.
When Apollo offered Cooper a 40% premium on its stock price, however, Cooper's board of directors unanimously accepted the deal.
According to Armes, it was not that simple. In an exclusive interview with Modern Tire Dealer Editor Bob Ulrich, he said there were at least two other factors that swayed the board.
"We also needed to make sure that with the leverage they were going into, this deal could be done with the financing arrangements that Apollo had," he said. "We got to a point where we were comfortable with that.
"Third, we needed to find out what the deal would do to our operation and how it would impact our people. We needed to protect that side of it as well.
"They’ve agreed to retain our facilities and our people because there is very little overlap between the two companies on a global basis -- that’s also what makes it more complementary."
Armes said there are a number of benefits to existing Cooper dealers.
"When you think about it, we’re bringing a broader product portfolio and brands that would give an extended choice to our customers.
"I know a lot of our customers are taking more of a wait-and-see attitude on this, but I’ve talked with enough customers myself to know there’s a lot of interest in how they can really benefit from this with the different brands. They are already asking about off-the-road or farm tires, those products that we don’t have. There also is a different level of TBR tires that will be available to them.
"I think some of our customers are getting excited about their opportunities; they just don’t know what they will be until we get through this, close the deal, and are able to present some opportunities to them from a brand product portfolio standpoint."
In the short term, Cooper will continue to invest in product development, brands and facilities. Armes said there are "no plans to change where we are headed to support these areas per our existing strategic plans."
He added that the deal should be completed before the end of the year.
In addition to its own brands, does Cooper have the capacity to produce Apollo and perhaps Vredestein tires in North America? (Apollo purchased Vredestein Banden B.V. in 2009). And why didn't the much larger Cooper buy Apollo instead?
Answers to these questions and more will appear in MTD's July issue.