MUMBAI: Shares in India's Apollo Tyres rose more than 11 percent on Tuesday morning after a $2.5 billion deal to buy US-based Cooper Tire & Rubber collapsed following months of frustrating negotiations.
US manufacturer Cooper said it was scrapping the deal that would have created the world's seventh-largest tyre maker after being informed by Apollo that financing for a takeover was no longer available.
"It is time to move our business forward," Cooper CEO Roy Armes said in a statement late Monday, after acrimonious negotiations that saw the parties end up in court.
Shares of Apollo Tyres climbed 11.15 percent to 113.0 rupees on the Bombay Stock Exchange on Tuesday.
Cooper Tire shares rose 5.40 percent to $24.20 in New York by Monday's close.
Indian analysts were unhappy about Apollo's bid, saying it was paying too much for the US company and would be overloaded with debt.
Apollo announced in June it would buy the much larger Cooper Tire in a debt-funded deal, but the move was never finalised after it became bogged down in labour problems embroiling Cooper's US and Chinese operations.
The merger agreement was valid up to December 31, after which Apollo could drop the deal.
In its statement, Cooper said the merger failed because Apollo did not live up to its undertakings, and it would pursue legal steps to protect the company.
The merger had wound up in a US court over Cooper's claims that Apollo was delaying the transaction to wrestle down the offer price and was suffering from "buyer's remorse".
Apollo successfully denied the allegations but conceded it would be tough at the initial offer price to find lenders to finance the deal due to Cooper's problems. (AFP)