Apollo Tyres tanks on acquisition of US company for Rs 14,500 crore

Apollo Tyres has tanked 17% to Rs 76.35 in early morning deals on BSE after the company said it will acquire US-based Cooper Tire & Rubber Company in an all-cash transaction of around Rs 14,500 crore ($2.5 billion).

A consortium of four banks — Morgan Stanley, Deutsche Bank, Goldman Sachs and Standard Chartered — will raise $ 2.5 billion of new debt for Apollo to fund the acquisition.

Yaresh Kothari, auto analyst, Angel Broking, said Apollo Tyres’ debt-to-equity ratio would increase to 3.8 from the present 0.8 after the acquisition.

The stock opened at Rs 86 and has seen heavy activity on the counter. A combined 3.02 million shares have already changed hands on the counter till against an average sub 2 million shares that were traded daily in past two weeks on BSE and NSE.