* Deal valued at about $600 mln - source
* Apollo Tyres to raise up to $150 mln in secondary share
sale - source
* Cooper Tire shares jump as much as 11 pct
(Adds source confirmation)
By Sumeet Chatterjee and Sagarika Jaisinghani
Oct 11 (Reuters) - Indian tire manufacturer Apollo Tyres
is in early talks to acquire a majority stake in
U.S.-based Cooper Tire & Rubber Co in a deal valued at
around $600 million, a source with direct knowledge of the
situation told Reuters.
Shares of Cooper Tire jumped as much as 11 percent to
$20.76, valuing the company at $1.3 b illion. Apollo has a market
value of about $840 million.
The acquisition of the world's 9th biggest tire maker by
sales would give Apollo Tyres access to the U.S. market for
replacement tires for cars and light and medium trucks.
Apollo Tyres has hired Standard Chartered and HSBC for a
secondary share sale in the Indian market to raise up to $150
million, the source said.
It is also in talks with Standard Chartered for financing,
this person said.
Apollo Tyres will use fresh borrowing and proceeds from the
share sale, expected mid November, to finance the deal, the
News of the deal talk was first reported by India's Economic
Times on Thursday. (http://r.reuters.com/cak33t)
Apollo Tyres, which does not currently operate in the United
States, gets two-thirds of its revenue from India but its market
in that country is softening along with the economy.
Truck tires account for about 60 percent of its sales in
India and half of its global sales.
"Apollo Tyres has a target to become a global top-10 tire
maker by 2016 and this deal ... could comfortably get them
there," Morgan Stanley analysts led by Ravi Shanker wrote in a
Tire makers are under pressure from rising rubber and oil
costs and weakening demand. Cooper rival Goodyear Tire & Rubber
Co said in July it expected raw material costs to rise
about 7 percent in 2012.
Cooper Tire focuses on replacement tires, an area of the
market that is expected to benefit from growing fleets of aging
vehicles in the United States, S&P Capital IQ analyst Efraim
Apollo Tyres reported revenue of 121.5 billion rupees ($2.31
billion) in the year to March 31. (http://r.reuters.com/tek33t)
ON A BUYING SPREE
Apollo Tyres bought South Africa-based Dunlop Tyres
International Ltd in 2006 and Dutch tire-maker Vredestein Tires
in 2009. (http://r.reuters.com/xuk33t)
"Apollo has some familiarity with Cooper - Dunlop SA has
until recently been the sole distributor of Cooper Tires in
South Africa," the Morgan Stanley analysts said.
Cooper Tire had net sales of $3.93 billion in 2011. The
company is scheduled to report third-quarter results on Nov. 2.
Cooper Tire declined to comment. "We have a strict policy of
not commenting on rumors and speculation in the market," company
spokeswoman Anne Roman said.
A spokesman for Apollo Tyres also declined to comment.
Cooper Tire's stock was up 6 percent at $19.74 on the New
York Stock Exchange on Thursday afternoon. Goodyear's shares
were up 2 percent at $12.56.
Apollo Tyres' shares closed 2 percent higher on India's
National Stock Exchange.
($1 = 52.6700 Indian rupees)
(Reporting by Sumeet Chatterjee in Mumbai and Sagarika
Jaisinghani in Bangalore; Editing by Ted Kerr, Saumyadeb
Chakrabarty and Supriya Kurane)