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3 Shareholders Challenge Goodyear-Cooper Deal

Filings Show There Were Other Suitors

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KEYWORDS Cooper Goodyear
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Cooper shareholders have overwhelmingly approved the acquisition approval by fellow Ohio-based tiremaker Goodyear Tire & Rubber Co.

Three Cooper Tire & Rubber Co. stockholders allege the tiremaker violated federal securities laws and have filed court cases related to Cooper’s pending acquisition by Goodyear Tire & Rubber Co.

In a March 31 filing with the Securities and Exchange Commission (SEC), Goodyear and Cooper dismiss the allegations and say they believe they “are without merit.”

Three separate cases have been filed in U.S. District Courts in Delaware and New Jersey. Two of the cases were filed against Cooper and the Cooper board of directors, while the third case was additionally filed against Goodyear and Vulcan Merger Sub Inc., a wholly owned subsidiary of Goodyear.

Though filed separately on March 19, March 25 and March 26, the tiremakers summarize the suits by saying they “generally allege that Cooper Tire and its directors violated the federal securities laws.”

The cases show the defendants say they weren’t provided with the same thorough details and financial background information that the tiremakers and the Cooper board had at its disposal. Cooper shareholders are scheduled to vote on the acquisition deal April 30.

All three plaintiffs are asking the courts to stop the proceedings or transactions unless that information is disclosed. They’re also seeking reimbursement of attorney fees and other reasonable costs.

The shareholders - Shiva Stein, Jeffrey Miles and Gilbert Griffin - all point to a March 19 registration statement that was filed with the SEC and provided to shareholders. They say that report was incomplete because it didn’t include the financial projections that Goldman Sachs provided to the Cooper board and also omitted other line-item specific details.

Stein’s case also notes that Cooper shareholders weren’t given access to financial information about Goodyear, which will be important as after the sale, Cooper shareholders would own 16% of the company.

And though the specific information the shareholders requested wasn't posted — namely, the profit projections from Goldman Sachs — Goodyear did file with the SEC an unaudited report that combines the 2020 financials of Goodyear and Cooper.

But it also states that it doesn't purport those would have been the actual results if the companies had been combined last year. It notes those figures are "not intended to project the future results of operations that the combined company may achieve after Goodyear’s pending acquisition of Cooper is consummated."

There were other suitors

One notable point in the Miles case is the reference to other suitors that made proposals to acquire Cooper.

“During the sales process, the company entered into confidentiality agreements with potential buyers, including Goodyear, Party B, Party C and Party D.”

Miles contends the tiremakers should make the terms of all of those agreements public to shareholders.

Instead, it notes that Goodyear and Cooper had “an 18-month standstill provision, which provided Goodyear the ability to make offers on a confidential basis to the Cooper Tire board, including in the event that Cooper Tire entered into a definitive agreement with respect to a transaction or series of related transactions” related to another sale, transfer or merger.
 

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