Cooper Tire, Chengshan Group Agree to Settle JV Dispute

Cooper Tire & Rubber Co. and China's Chengshan Group Co. Ltd. have reached agreement to end their troubled tiremaking joint venture in Shandong Province, according to the Financial Times.

The deal is structured to end a dispute that began after Cooper announced plans last summer to sell itself to India's Apollo Tyres Ltd. for $2.5 billion.

The sale collapsed, in part because news of the intended sale prompted workers at the Cooper Chengshan Tire Co. venture to seize the factory, exile Cooper managers and suspend production of Cooper-branded tires. The facility has capacity to make 15 million truck, tire and passenger car tires annually.

Under the settlement plan worked out between Cooper and Chengshan, an independent arbiter will determine a value of at least $435 million for the venture, which is owned 65% by Cooper and 35% by Chengshan.

The Chinese company will then have first option to buy Cooper's stake, sell its holding to Cooper or do nothing and allow its stake to be acquired by the American tiremaker.

Even if Chengshan buys out Cooper, the former joint venture will continue to make select Cooper-brand tires for at least three years, according to the FT.