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What: Shares of Cooper Tire & Rubber Co. (NYSE:CTB) soared a whopping 40% today after India's Apollo Tyres agreed to acquire the replacement tire maker for about $2.2 billion.
So what: The all-cash deal values Cooper Tire at $35 per share and represents a 42% premium to its closing price on Tuesday. The move should allow Apollo to greatly boost its presence in North America and will create the seventh-largest tire company in the world with a combined $6.6 billion in revenue.
Now what: The deal is expected to close in the second half of 2013 and be immediately accretive to Apollo's earnings. "This is a compelling transaction that is in the best interest of Cooper's stockholders and offers attractive benefits to our customers and employees," Cooper Tire Chairman and CEO Roy Armes said. "Together, our two organizations have almost no geographic overlap and significant opportunities for growth." So while Cooper Tire shares are likely all gassed out at this point, close rival Goodyear Tire & Rubber (NASDAQ:GT) -- which is up 3% on today's news -- might be a good way to get into the suddenly attractive space.
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