UPDATE 1-Cooper shareholders approve $2.5 bln Apollo deal
(Updates with shareholder approval, closing share price)
Oct 1, (Reuters) - Cooper Tire and Rubber Co shareholders on Monday approved the U.S. company's $2.5 billion sale to India's Apollo Tyres Ltd, in a transaction that would create the world's seventh-largest tyre maker.
The approval brought Apollo one step closer to completing the takeover, although hurdles remain due to opposition from workers at Cooper's joint venture in China and U.S. labour issues that could delay the deal.
If completed, the deal would be the second-largest U.S. acquisition by an Indian company and one of the top 10 outbound takeovers from Asia's third-largest economy, according to Thomson Reuters data.
About 96 percent of the shares that were voted at a Cooper shareholder meeting on Monday were in favor of the merger. The company said about 78 percent of Cooper's outstanding common shares were voted at the shareholder meet.
Shareholders stand to receive $35 per Cooper share, a premium of more than 40 percent to its price before the acquisition announcement on June 12. Cooper shares rose 3.5 percent to a high of $31.44 after the shareholder meeting on Monday, before closing at $30.80.
Cooper Chairman and Chief Executive Roy Armes said in a statement the deal would create a "$6.6 billion leader in the tyre industry with a strong global footprint".
Still, Cooper shares have slipped since rising close to the offer price as roadblocks to the acquisition emerged due to worries over the debt burden of the new owner.
"You're putting pressure on the company by the amount of debt that they want to use to buy this and so I think the market will always be skittish in the situation," said Chris DeMuth Jr, portfolio manager at U.S.-based Rangeley Capital. Rangeley Capital owns less than 5 percent in Cooper, he said.
Workers at Cooper's China joint venture, Cooper Chengshan Tire Co in China's eastern Shandong province, have been striking against the deal for about three months, while its local partner has filed a lawsuit seeking to dissolve the business arrangement.
Separately, a U.S arbitrator ruled Cooper could not sell two of its factories in the country until a collective bargaining agreement was reached between Apollo and members of the plants' union.
The two companies have said they hope the deal will get the final all-clear by the end of the year.
Apollo plans to fund the acquisition entirely through debt, most of which will be raised through Cooper, whose market value is currently nearly four times that of the Indian company.
Apollo, whose shares have lost a quarter of their value since the deal was made public, hopes to gain a foothold in the world's two biggest auto markets, China and the United States, by buying Cooper.
Shareholder approval of the deal also means Apollo can start drawing down loans that have already been committed by banks, according to a source with direct knowledge of the matter.
Apollo declined comment on Monday, while Cooper did not respond to an email seeking comment outside U.S. business hours.
The banks financing the deal include Standard Chartered and Morgan Stanley.
(Reporting by Aradhana Aravindan in MUMBAI and Mridhula Raghavan in BANGALORE; Additional reporting by Sumeet Chatterjee; Editing by Stephen Coates)