Cooper shares slide on investor fears
Shares in Cooper Tire & Rubber fell 3.3 per cent to US$31.50 on Monday 26 August, putting the stock down 6.1 per cent in total this month. According to the Wall Street Journal, this marks a two-month low and comes off the back of investor fears that the decision India’s central banks to review large deals by Indian companies may affect the transaction. Indeed one report emanating from India suggests that Apollo Tyres’ big for Cooper Tire is about to get reviewed in particular.
The deal, announced on 12 June, will see Apollo take on US$450 million of debt to finance its $2.5 billion offer. Cooper Tire will also take on $2.1 billion of debt, although this will be largely through a bond offering. Either way the amount of debt involved has also spooked some investors.
Strike issues at one of Cooper’s Chengshan plants in China have also added to the complications. All there are some indications that the worst of this is over and the factory is once again producing some tyre products – although not currently those bearing the Cooper moniker.
Meanwhile on 12 August Zacks’ analysts rated Cooper Tire shares as “neutral” reaffirming a previous rating. Zacks currently has a $35.00 price target on the stock.