India's Apollo Tyres to buy Cooper Tire for $2.5 billion


India's Apollo Tyres Ltd said it would buy U.S.-based Cooper Tire & Rubber Co for about $2.5 billion in a deal that would make it the world's seventh-largest tire maker.

Apollo's cash offer of $35 per share represents a premium of about 43 percent to Cooper's closing price on Tuesday on the New York Stock Exchange.

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Apollo Tyres, which does not currently operate in the United States, gets two-thirds of its revenue from India, where a weak economy has hurt demand for cars and commercial vehicles.

The acquisition of Cooper, the world's 11th biggest tire company by sales, will give Apollo access to the U.S. market for replacement tires for cars and light and medium trucks.

The two companies had combined sales of $6.6 billion in 2012.

Reuters and others reported in October that the companies were in talks over a potential deal.

Apollo said on Wednesday it would raise $2.5 billion of new debt to fund the acquisition.

Cooper shares were up 39 percent at $34.28 in pre-market trading. Apollo shares closed up 2.7 percent at 91.95 rupees in Mumbai trading ahead of the announcement.

(Reporting by Bijoy Koyitty and Aradhana Aravindan; Editing by Saumyadeb Chakrabarty)