MUMBAI: Shares of India's Apollo Tyres rose as much as 4.13 percent on Monday on growing uncertainty over a $2.5 billion deal announced this year to buy out US-based Cooper Tire & Rubber.
Apollo shares reached 69.25 rupees on the Bombay Stock Exchange, after the tyre maker said it was "working diligently" to resolve issues to finalise the merger with Cooper, which has accused Apollo of delaying the deal.
The Indian firm's shares have plummeted since the deal was announced on June 12, losing a quarter of their value, on concerns the all-cash deal would put a strain on its balance sheet.
Apollo plans to fund the acquisition entirely through debt.
"Apollo remains firmly of the belief that a merger with Cooper is compelling from a strategic perspective," Apollo said in a statement late on Sunday.
Apollo has asked Cooper for updated financial statements due to "significant and unanticipated costs" that "go well beyond" what it is obligated to bear under the merger agreement.
"Cooper has acknowledged to Apollo that some price reduction is warranted."
"The issue now is by how much," the Apollo statement said.
Cooper said Friday it had filed a complaint in a US court to "expeditiously close the pending merger" under the terms of their agreement.
Among other matters, the Cooper complaint alleges Apollo is seeking to delay an agreement with the United Steelworkers union that represents Cooper employees at several facilities.
Apollo said on Sunday it finds it "implausible" to be forced into "Cooper's accelerated timeline" after the American company "failed to resolve these issues for several months".
An Apollo spokesman on Monday declined to comment further.
The deal had been expected to be completed by the end of the year to create the world's seventh largest tyre producer.
Analysts have expressed surprise at the size of the acquisition, which is India's biggest ever bid for a US-based company, according to London-based data provider Dealogic.
The buyout is taking place at a time when Cooper's pace of growth in the tyre business has been slowing in recent quarters, local brokerages have said. (AFP)
