Wires

UPDATE 2-India's Apollo Tyres eyeing Cooper Tire-report

Share

* Deal could be for $600 mln-$800 mln - India's EconomicTimes

* Cooper Tire shares jump as much as 11 pct

(Adds analysts' comments, background; updates shares)

Oct 11 (Reuters) - Indian tire manufacturer Apollo Tyres

is in the process of acquiring a controlling stake inU.S.-based Cooper Tire & Rubber Co in a deal valued atbetween $600 million and $800 million, India's Economic Timesreported.

Shares of Cooper Tire jumped as much as 11 percent to$20.76, valuing the company at $1.3 b illion. Apollo has a marketvalue of about $840 million.

The acquisition of the world's 9th biggest tire maker bysales would give Apollo Tyres access to the U.S. market forreplacement tires for cars and light and medium trucks, theEconomic Times said. ()

Apollo Tyres, which does not currently operate in the UnitedStates, gets two-thirds of its revenue from India but its marketin that country is softening along with the economy.

Truck tires account for about 60 percent of its sales inIndia and half of its global sales.

"Apollo Tyres has a target to become a global top-10 tiremaker by 2016 and this deal ... could comfortably get themthere," Morgan Stanley analysts led by Ravi Shanker wrote in aclient note.

Tire makers are under pressure from rising rubber and oilcosts and weakening demand. Cooper rival Goodyear Tire & RubberCo said in July it expected raw material costs to riseabout 7 percent in 2012.

Cooper Tire focuses on replacement tires, an area of themarket that is expected to benefit from growing fleets of agingvehicles in the United States, S&P Capital IQ analyst EfraimLevy said.

Apollo Tyres reported revenue of 121.5 billion rupees ($2.31billion) in the year to March 31. ()

ON A BUYING SPREE

Apollo Tyres bought South Africa-based Dunlop TyresInternational Ltd in 2006 and Dutch tire-maker Vredestein Tiresin 2009. ()

"Apollo has some familiarity with Cooper - Dunlop SA hasuntil recently been the sole distributor of Cooper Tires inSouth Africa," the Morgan Stanley analysts said.

Cooper Tire had net sales of $3.93 billion in 2011. Thecompany is scheduled to report third-quarter results on Nov. 2.

Apollo Tyres could be raising close to $600 million of debtto fund the transaction, the Economic Times said. StandardChartered Bank is advising Apollo Tyres, it said.

Cooper Tire declined to comment. "We have a strict policy ofnot commenting on rumors and speculation in the market," companyspokeswoman Anne Roman said.

A spokesman for Apollo Tyres also declined to comment.

Cooper Tires stock was up 8 percent at $20.16 on the NewYork Stock Exchange on Thursday afternoon. Goodyear's shareswere up 3 percent at $12.73.

Apollo Tyres' shares closed 2 percent higher on India'sNational Stock Exchange.

($1 = 52.6700 Indian rupees)

(Reporting by Sagarika Jaisinghani in Bangalore; Editing byRodney Joyce, Ted Kerr and Saumyadeb Chakrabarty)

((sagarika.jaisinghani@thomsonreuters.com)(within U.S. +1 646223 8780, outside U.S. +91 80 4135 5800)(Reuters Messaging:sagarika.jaisinghani.reuters.com@reuters.net))

Keywords: COOPERTIRE OFFER/