UPDATED: 12/30/13 11:11 am ET - adds Apollo statement
(Bloomberg) -- Cooper Tire & Rubber Co. dropped plans to merge with Apollo Tyres Ltd., saying financing for the transaction is no longer available following a valuation dispute with the Indian competitor.
The U.S. manufacturer "will continue to pursue the legal steps necessary to protect the interests of our company and our stockholders," Findlay, Ohio-based Cooper Tire said in a statement today.
Cooper said on June 12 that Gurgaon-based Apollo planned to buy the U.S. tiremaker for $35 a share in a $2.5 billion deal. Cooper initiated legal action in October to force completion of the purchase, saying executives at the Indian tire producer had "buyer's remorse" and sought a price cut.
Apollo has contended the U.S. company's value has declined partly because of potentially costly contract talks with the United Steelworkers union and difficulties getting financial data from Cooper's Chinese partner, Cooper Chengshan (Shandong) Tire Co., which opposed the deal.
Apollo, in a statement, said it is disappointed that Cooper has "prematurely attempted to terminate" the deal.
"While Cooper’s lack of control over its largest subsidiary and inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the last several months, however, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both companies and their shareholders.
"Cooper's actions leave Apollo no choice but to pursue legal remedies for Cooper's detrimental conduct," the statement said.
Delaware Chancery Court Judge Sam Glasscock III last month rejected Cooper's claim that Apollo breached the merger accord by dragging its feet in seeking to negotiate a contract with the steelworker's union that would have helped clear the way for the deal.
Glasscock who sits in Georgetown, Del., allowed Cooper to appeal his ruling to the state's highest court, which declined earlier this month to hear it and sent it back to the judge. Apollo's lawyers asked Glasscock on Dec. 19 to deny Cooper executives access to a $112.5 million letter of credit that covers breakup fees.
Anne Roman, a spokeswoman for Cooper, said the company couldn't immediately comment on future litigation tactics or possible damages that might be sought.