Cooper Tire & Rubber Co. confirms its Chinese partner plans to exercise its option to acquire the Findlay, Ohio-based company’s 65% ownership stake in Cooper Chengshan (Shandong) Tire Co. Ltd.
Cooper says it is currently reviewing the notice and documentation provided by Chengshan to confirm that all of the requirements under the Aug. 14, 2014, option agreement have been met.
Delivery of the exercise notice is one of several steps necessary prior to any transaction, according to Cooper Chairman, Chief Executive Officer and President Roy Armes.
“Cooper is committed to meeting the needs of our customers and continuing to grow in China. Should the process of resolving the ownership of CCT result in Chengshan acquiring our interest in the joint venture, a commercial offtake agreement is in place under which CCT is required to produce Cooper brand products—including Roadmaster truck tires—through mid-2018.
Armes says the purpose of the offtake agreement is to assure a secure supply of Cooper brand products while also providing the flexibility to enter into acquisitions, new offtake relationships, or possible greenfield development of additional production capacity anywhere around the world to support the continued expansion of Cooper’s business.
“China is a core growth market for Cooper and we have a strong track record of success in the region,” he says.
“To support our strategic plans there, we expect to continue to invest in our sales and marketing organization, our rapidly growing distribution network, and the strong technology capability we have in place.
“In addition, we expect to continue to invest in our wholly-owned Cooper Kunshan Tire operation, which is a world-class tire production facility with room to expand. We look forward to final resolution of the ownership of CCT as we continue to pursue our global growth objectives.”
Under the Aug. 14 option agreement, Chengshan had first option to act. They could either exercise the call option to acquire Cooper's 65% ownership stake in CCT, exercise the put option to have Cooper purchase their 35% ownership stake in CCT, or do nothing, according to Anne Roman, vice president, communications & public affairs for Cooper.
"In the event that all of the requirements have been met, Cooper does not have the right under the agreement not to sell our interest in CCT to Chengshan," she says.
Roman declined to specify when the company expected to finish reviewing the documentation.
For recent articles on the ownership of the Chinese plant, see:
