Apollo Tyres shares on Thursday fell by over 21 per cent to hit a one-year low in early trade, after the company announced that it will buy US-based Cooper Tire & Rubber Co. for around Rs 14,500 crore.
At 11.25 am, the shares of the company were down 19.08 per cent at Rs 74.45 on BSE. Similarly on NSE the shares were down 19.52 per cent at Rs 74 during the same time.
After making a weak opening, shares of the company further tanked 21.41 per cent to Rs 72.30 -- its 52-week low on the BSE .
At the NSE, the stock plunged 21.37 per cent to hit a one- year low level of Rs 72.30.
Following the decline in the stock, the market capitalisation of the company tanked by Rs 918 crore to Rs 3,719 crore.
"We are concerned about the huge debt burden which could strain the balance sheet of the combined entity," said Surjit Arora, Research Analyst (Institutional Equities) at Prabhudas Lilladher.
"While the acquisition will be positive for the company in the longer run, the near term challenge for the company would be to successfully integrate Cooper Tire and Rubber Company operations with itself," Angel Broking said in a report.
Post the transaction, Apollo Tyres will become the seventh largest tyre maker in the world by revenue at $6.6 billion from its current 16th position at $2.5 billion and give it greater access to US, the second largest automobile market in the world after China.
As part of the deal, Apollo Tyres will take over the operations of Cooper, including eight plants and 14,000 employees in different parts of the world. The American firm is the 11th largest tyre maker in the world with a revenue of over $4 billion.
The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high-growth end-markets across four continents.
Cooper, the 11th-largest tyre company in the world by revenue, was founded in 1914 and supplies premium and mid-tier tyres worldwide with brands Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
With agency inputs