Apollo Tyres shares hit on Cooper Tire deal woes

Apollo Tyres' shares slumped nearly 9 per cent intra-day before recovering to close down 2 per cent on concerns over debt burden after Cooper Tire and Rubber Co shareholders approved the company's $2.5 billion sale to the Indian company.

"We are pleased stockholders endorsed this compelling transaction (Cooper's sale to Apollo Tyres), which will create a $6.6 billion leader in the tyre industry with a strong global footprint. This will include a presence in the world's largest tyre market of North America as well as in the fastest growing geographies of India and China," Cooper Tire Chairman, CEO and President Roy Armes had said on Monday.

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.

After making a weak opening, shares of Apollo Tyres tanked 8.33 per cent to Rs 61 on the Bombay Stock Exchange before recovering to close down 1.80 per cent at Rs 65.35.

"The huge debt burden could strain the balance-sheet of the combined entity," said Kishor Ostwal, CMD, CNI Research.

On the National Stock Exchange, shares of the company plummeted by 8.92 per cent intra-day before settling at Rs 65.80, down 1.28 per cent, for the day.

"A positive response from the shareholders clears the path for Apollo Tyres to complete the merger process and expects to close the transaction by year-end. However, hurdles still remain for Apollo Tyres due to opposition from workers at Cooper Tire and Rubber Company (CTB) joint venture in China and US labour issues which could hamper the deal," Angel Broking said in a report.

In terms of volume, 6.96 lakh shares of Apollo Tyres changed hands on BSE while over 48 lakh shares were traded on NSE.

In the stock market, the BSE Sensex ended the day at 19,517.15, up 137.38 points.

With inputs from PTI