What will Cooper/Apollo merger mean to industry?
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 Tyres Ltd. 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 Tire & Rubber Co. gives Apollo a jump start for growth in this market with a valuable partner. (See Apollo Tyres to acquire Cooper Tire.)
“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.”
Healy says for the company to be successful it must strive to maintain the close bonds with Cooper tire dealers that the U.S. company has maintained over the years. “Cooper’s dealers are very loyal,” Healy says. “To drive value, Apollo will have to keep the dealer connection strong.”
In a memo to company 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."
Armes said the merger will give more options for customers and opportunities for employees. Existing Cooper facilities will be maintained, Cooper will recognize labor unions and honor collective bargaining agreements, compensation and benefit levels for non-union employees will be generally maintained, and there will be management continuity.
"From a strategic perspective, this acquisition simply makes sense. It positions us well for growth and delivers value to our stockholders, which is our obligation as a publicly held company."
Armes said the two companies are a great match.
"Apollo and Cooper complement each other in several ways:
* "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.
* "Both of us are also passionate about innovation and technology and have won important third-party recognition for our products.
* "Our cultures are also extremely compatible; that’s an important element. Both companies maintain strong, values-based cultures and enjoy longstanding reputations for skilled management, excellent customer service and responsible worldwide growth.
* "We commit equally to employee safety and development as well as sustainability and giving back to our communities with programs that further these goals. In fact, the values statement for Apollo is called 'The Apollo Way,' and reflects many of the core beliefs in our own 'The Cooper Way.'
"After considering all of these factors, we concluded that Apollo and Cooper will work well together as a combined company and provide growth opportunities for our people."