Apollo Tyres Files Counterclaim Against Cooper

       By Tess Stynes 

    Apollo Tyres Ltd. (500877.BY) filed a counterclaim to Cooper Tire & Rubber Inc.'s (CTB) lawsuit to force the India-based firm to proceed with its deal for the U.S. tire maker, denying allegations by Cooper that it deliberately has been dragging its feet on closing the deal.

    It is the latest in a volley of blows between the two companies that threatens the pending $2.5 billion merger deal.

    Apollo Tyres had asked its bid of $35 a share be reduced substantially because of what it sees as increased costs arising from negotiations with the United Steel Workers union at two of Cooper Tire's U.S. factories and a disagreement with the company's Chinese joint-venture partner.

    On Tuesday, Apollo reaffirmed that it believes that a merger with Cooper is strategically compelling and said it continues to work diligently to reach a settlement with the United Steelworkers. Apollo also is seeking a court judgment that requirements to close the deal haven't been satisfied. Apollo also contends Cooper Tire didn't provide all the necessary information about its finances and the China partnership before Apollo signed the deal.

    Earlier this month Cooper Tire filed suit in a Delaware court to force Apollo to proceed with the deal on its existing terms, which included a 43% premium to the price before the deal was announced. Cooper Tire's suit alleged Apollo is deliberately dragging its feet to delay a closing beyond Dec. 31, after which the deal can be terminated without penalty.

    If the deal is terminated as a result of a contract breach by Apollo, Cooper Tire could pursue financial damages beyond the $112.5 million breakup fee in their June agreement. Cooper Tire would have to pay Apollo $50 million to back out.

    --Jeff Bennett contributed to this article.

    Write to Tess Stynes at tess.stynes@wsj.com