CCT strike not likely to affect deal

By Yang Jing Source:Global Times Published: 2013-12-18 22:53:02

The half-year strike against an acquisition deal for Cooper Chengshan (Shandong) Tire Co (CCT), a Sino-US joint venture, is still ongoing, but experts said Wednesday that the strike cannot stop the acquisition which is due to be sealed at the end of this year.

Hal Miller, president of the international tire division in US-based Cooper Tire & Rubber Co, came to China earlier this week to deal with the ongoing strike in CCT against Apollo Tyres Ltd, an Indian tire company, to acquire Cooper, 21st Century Business Herald reported Wednesday.

No matter how the labor union responds, the acquisition deal was signed by Cooper and Apollo, so the deal will still close on time as the contract indicates, Wang Danqing, a partner at Beijing-based ACME Consultancy, told the Global Times.

Miller said CCT now produces only products under the Chengshan brand - the brand owned by the Chinese party in the joint venture, and had prevented Cooper's management team from entering the factory, according to the report.

Miller is also worried because the staff from Cooper cannot get financial or operational data from the joint venture, which may lead to punishment from the securities authorities or delisting for Cooper, which is listed on the New York Stock Exchange, the report said.

Miller claimed that Cooper has brought several lawsuits against these acts, including some members of CCT's labor union using the official seal of the joint venture illegally, the report said.

If Miller's claims are true, then the labor union has infringed the legal rights of the US company, Liang Xuejun, a lawyer at Beijing-based Chang An Law Firm, told the Global Times Wednesday.

However, the possible punishment or delisting may be considered indirect losses based on speculation, Liang said, noting courts hardly support suing for indirect loss.

Miller came to China because the due date of the acquisition is just two weeks away and the two sides of CCT still have not reached any agreement, the report said, noting Miller expected that the local government could help mediate but the latter did not get involved.

The local government refused to comment on the matter when contacted by the Global Times Wednesday.

Apollo announced in June to buy Cooper for $2.5 billion due to the latter's "particularly robust presence in North America and China."

Cooper believed the acquisition will benefit the CCT because it will bring "highly complementary brands, geographic presence and technological expertise," according to a statement sent to the Global Times in August.

The acquisition will give Apollo ownership of the stake of the US partner in CCT, the Sino-US joint venture in Rongcheng, East China's Shandong Province.

But the deal is strongly opposed by the venture's more than 5,000 Chinese workers, who have been carrying out a large-scale strike since June.

In addition to opposition from China, the acquisition is also opposed by labor unions in the US and the UK, said the report.

The workers protested because they saw no future with the acquisition deal, especially since Apollo is full of liabilities, Liang Yiting, head of CCT's labor union, told the Global Times in August.

Apollo is making a rash step, the report said, noting Apollo's acquisition is made all on debts, including $2.1 billion borrowed from banks guaranteed by Cooper, whose annual profit is not enough to pay the annual interest.

There is a high possibility of capital shortage, bankruptcy, job cuts and assets loss following the acquisition, according to a statement released on July 23 on the website of Chengshan Group, the Chinese stake holder of CCT.

Liang and CCT's labor union could not be reached for comment Wednesday by press time.

Posted in: Companies

blog comments powered by Disqus