A binding decision on the future ownership of the Chinese joint venture company set up by Cooper Tire & Rubber and Chengshan Group Company Ltd is still to be made, however the two parties are now in talks and have entered into an option agreement for working out the future of Cooper Chengshan (Shandong) Tire Company Ltd (CCT).
According to the option agreement, following the delivery of a fair market valuation for the joint venture plant – the deadline for this independent valuation has been extended from 11 August to 24 August 2014 – Chengshan holds the first option, within 45 days, to elect to purchase Cooper’s 65 per cent interest in CCT or to sell its 35 per cent interest to Cooper. Cooper Tire reports that Chengshan also has the right “not to exercise either of these options,” and should this third alternative be selected the joint venture operation will continue as before. If Chengshan opts to acquire Cooper’s stake in the joint venture, Cooper will maintain offtake rights, and the operation will agree to produce Cooper-brand products, including truck and bus radial tyres, for a minimum of three years.
“Resolving the future ownership of CCT has remained a priority for our organisation as we continue to move forward with our growth plans for China,” said Cooper chairman, chief executive officer and president Roy Armes on 15 August. “Today’s announcement is another step in that process. As we have previously stated, Cooper is confident in our growth plans for China regardless of who owns CCT in the future.”
