Chart of the day: Will Apollo-Cooper deal go through?

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26 Aug, 2025 12:21

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Riken Mehta
moneycontrol.com

Apollo Tyres share has stabilized over the last month, amid expectations that the deal—seen as expensive by analysts—to acquire Ohio-based Cooper Tire for USD 2.5 billion may be eventually shelved.

Uncertainty over the deal has caused Apollo to lag shares of rival companies over the last couple of months, even as sentiment for the tyre sector perked up because of weakness in the rupee.

Apollo has been pressing Cooper to lower the price, citing unresolved labour issues and downward revision in revenue projections as the key reasons.

Both Apollo and Cooper are now fighting the matter in the court.

The street is betting that the deal may be eventually called of. This is partly reflecting in the stock prices. Cooper Tire has lost all the gains and is now trading around the same level before the deal was announced. Apollo on the other hand has recovered nearly 30 percent from its 52-week low touched in June, soon after the deal was announced.

At current market price, the stock is trading at a price to earning (P/E) multiple of 5.5, compared to 7.2 prior to the deal. If the deal does not happen, then analysts expect Apollo to trade at P/E of 7 (same level before the deal). However, Apollo Tyres will have to pay USD 112.5 million in order to withdraw from the deal, while Cooper will have to pay a termination penalty of USD 50 million if it decides to do the same. In past three months, its peers like Ceat, MRF and JK Tyres have gained 27 percent, 8 percent and 6 percent respectively. It seems Apollo has to catch up a lot in the coming days.