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EXHIBIT 8(ii)
BAKER & HOSTETLER LLP
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
September 3, 1999
The Standard Products Company
2401 South Gulley Road
Dearborn, Michigan 48124
We have acted as counsel to The Standard Products Company, an
Ohio corporation ("Standard"), in connection with the planned statutory merger
pursuant to the Ohio General Corporation Law and the General Corporation Law of
the State of Delaware (the "Stock Election Merger") of Standard with and into
Cooper Tire & Rubber Company, a Delaware corporation ("Cooper"), pursuant to the
Agreement and Plan of Merger, dated as of July 27, 1999, by and among Cooper,
CTB Acquisition Company, an Ohio corporation and a wholly-owned subsidiary of
Cooper ("CTB Acquisition"), and Standard (the "Merger Agreement"). Unless
otherwise defined herein, capitalized terms shall have the meanings ascribed to
them in the Merger Agreement.
You have requested our opinion with respect to certain Federal
income tax consequences of the Stock Election Merger. This opinion is being
delivered pursuant to Section 6.2(c) of the Merger Agreement and addresses
solely certain United States federal income tax consequences of the Stock
Election Merger.
For purposes of this opinion, we have examined (i) the Merger
Agreement, (ii) the proxy statement-prospectus (the "Proxy
Statement/Prospectus") that Standard will send to its shareholders in connection
with the special meeting of shareholders at which the Merger Agreement will be
approved, and (iii) such other items or matters as we have deemed necessary or
appropriate for purposes of rendering this opinion.
In connection with this opinion, we have assumed, with your
consent, that (i) the Merger Agreement and each of the other executed or
finalized documents that we have examined in connection with this matter have
not been, and will not be, amended prior to the Effective Time, (ii) the Stock
Election Merger will be effected in accordance with Article I of the Merger
Agreement and in the manner described in the Proxy Statement/Prospectus; (iii)
the representations made to us by each of Standard and Cooper are true and
complete when made and will be true and complete as of the Effective Time; and
(iv) the fair market value of the stock consideration provided in the Stock
Election Merger will be at least 45% of the fair market value of the total
consideration received by the shareholders of Standard pursuant to the Stock
Election Merger.
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September 3, 1999
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We have also assumed, with your consent, that:
1. The first discussions that representatives of Standard had with
representatives of Cooper regarding the possibility of the two
companies' engaging in some form of business combination occurred on
March 24, 1999. After March 23, 1999 and prior to the Stock Election
Merger, neither Cooper nor any person related to Cooper (as defined
in Section 1.368-1(e) of the income tax regulations) will have
acquired directly or through any agreement or arrangement with any
other person, any Standard common shares.
2. The Stock Election Merger was proposed, and will be undertaken, by
Cooper in order to further Cooper's long-term business strategy of
expanding the global presence and the global capabilities of its
engineered products division ("EPD"), which objective the Stock
Election Merger will facilitate by enabling Cooper, following the
Stock Election Merger, to integrate the operations of Standard's and
its subsidiaries' thirty-eight manufacturing facilities and five
technical centers, which are located in the United States and in
eight other countries, into EPD;
3. After March 23, 1999, neither Standard nor any person related to
Standard (as defined in Section 1.368-1(e)(3) of the income tax
regulations), (i) acquired any Standard common shares, or (ii)
redeemed or made distributions with respect to Standard common
shares, except for regular, ordinary dividends. Further, there is no
plan or intention by the shareholders of Standard who own 1 percent
or more of the Standard common shares, and to the best of the
knowledge of management of Standard, there is no plan or intention
by the remaining shareholders of Standard to sell, exchange or
otherwise transfer ownership (including by derivative transactions
such as an equity swap which would have the economic effect of a
transfer of ownership) to Cooper or any person related to Cooper
(within the meaning of Section 1.368-1(e)(3) of the income tax
regulations), directly or indirectly (including through partnerships
or through third parties in connection with a plan to so transfer
ownership), of a number of shares of Cooper common stock received in
the Stock Election Merger that would reduce the shareholders'
ownership of shares of Cooper common stock to a number of shares
having a value, as of the Effective Date, of less than 45 percent of
the value of all of the formerly outstanding Standard common shares
as of the same date. For purposes of this representation, Standard
common shares exchanged for cash or other property and Standard
common shares exchanged for cash in lieu of fractional shares of
Cooper common stock will be treated as outstanding Standard common
shares at the Effective Time.
4. There is no plan or intention by Cooper or any person related to
Cooper (as defined in Section 1.368-1(e)(3) of the income tax
regulations) to acquire or redeem any of the shares of Cooper common
stock issued in the Stock
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September 3, 1999
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Election Merger either directly or (except as provided in clause (i)
of the next sentence) through any agreement or arrangement with any
other person. Following the Stock Election Merger, Cooper has no
plan or intention to purchase or otherwise acquire, either directly
or through a subsidiary of Cooper, any shares of Cooper common stock
other than (i) any such shares which Cooper may from time to time
purchase in the open market pursuant to its May 5, 1997 common stock
repurchase program and in accordance with the share limit authorized
by Cooper's Board of Directors on May 5, 1997, and (ii) any such
shares which Cooper may from time to time purchase in privately
negotiated transactions from persons which were shareholders of
Cooper prior to the Effective Time, were not shareholders of
Standard at the Effective Time, and did not increase their
respective holdings of Survivor Common Stock after the Effective
Time, and Cooper will not, in any event, for a period of twenty-four
months following the Effective Time, directly or indirectly,
purchase or acquire any shares of Survivor Common Stock other than
pursuant to its May 5, 1997 stock repurchase program and the
privately negotiated transactions referred to above.
5. Standard is not, and within the last five years has not been, a
United States real property holding corporation within the meaning
of Section 897(c)(2) of the Internal Revenue Code of 1986, as
amended (the "Code").
6. The Merger Agreement was negotiated at arm's-length and the fair
market value of the shares of Cooper common stock and other
consideration received by each Standard shareholder will be
approximately equal to the fair market value of the shares of
Standard common shares surrendered in the Stock Election Merger.
7. The liabilities of Standard assumed by Cooper and the liabilities to
which the transferred assets of Standard are subject were incurred
by Standard in the ordinary course of its business.
8. Cooper, Standard and the shareholders of Standard will pay their
respective expenses, if any, incurred in connection with the merger,
except that Cooper will pay any such expenses of Standard which
Standard incurs prior to the Effective Time and which remain unpaid
as of the Effective Time.
9. There is no intercorporate indebtedness existing between Standard
and Cooper that was issued, acquired, or will be settled at a
discount.
10. Standard is not under the jurisdiction of a court in a Title 11
(Bankruptcy) of the United States Code or a receivership,
foreclosure or similar case in federal or state court.
11. At the Effective Time the fair market value of the assets of
Standard transferred to Cooper will exceed the sum of the
liabilities assumed by Cooper
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The Standard Products Company
September 3, 1999
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plus the amount of liabilities, if any, to which the transferred
assets are subject.
12. None of the compensation received by any shareholder-employees of
Standard will be separate consideration for, or allocable to, any of
their Standard common shares and none of the shares of Cooper common
stock received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement.
13. Standard is not an "investment company," i.e., a regulated
investment company, a real estate investment trust, or a corporation
50 percent or more of the value of whose total assets are stock and
securities and 80 percent or more of the value of whose total assets
are assets held for investment. For purposes of this representation,
a "regulated investment company" is a corporation which is
registered under the Investment Company Act of 1940, as amended, as
a management company or unit investment trust or which has in effect
an election under the Investment Company Act to be treated as a
business development company.
14. Standard and Cooper will not take any position on any Federal, state
or local income tax return or franchise tax return, or take any
other action or reporting position, that is inconsistent with the
treatment of the Stock Election Merger as a reorganization with the
meaning of Section 368(a)(1)(A) of the Code or with the
representations made herein.
15. The payment of cash in lieu of fractional shares of Cooper common
stock is solely for the purpose of avoiding the expense and
inconvenience to Cooper of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the Stock Election Merger to the
shareholders of Standard instead of issuing fractional shares of
Cooper common stock will not exceed one percent of the total
consideration that will be issued in the Stock Election Merger to
the shareholders of Standard in exchange for their shares of
Standard common shares.
16. The rights to purchase shares of Cooper preferred stock under the
Amended and Restated Rights Agreement dated as of May 11, 1998
between Cooper and The Fifth Third Bank, as rights agent, are not
separately tradeable from the shares of Cooper common stock and are
contingent, non-exercisable, subject to redemption.
17. Following the Stock Election Merger, Cooper will continue to own
directly and operate one or more of the significant historic
businesses in which Standard, immediately prior to the Effective
Time, will be engaged in directly or Cooper will own directly and
use in its business a significant portion of the historic business
assets which Standard will own directly immediately prior to the
Effective Time.
In rendering this opinion, we have assumed that the
assumptions set forth above are, and at the Effective Time will be, accurate in
all material respects, but we confirm to you that we have made no independent
investigation or inquiry whatsoever with respect to the accuracy of the matters
set forth in those assumptions. It should be noted in this regard that any
change in the matters recited in those assumptions could materially affect our
opinion as
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September 3, 1999
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expressed herein and possibly render such opinion inapplicable for purposes of
determining the U.S. federal income tax characterization of the Merger and the
treatment to be accorded Standard and its shareholders under the Code as a
result of the Merger.
On the basis of the foregoing, and our consideration of such other
matters as we have considered necessary, we hereby opine:
(i) the Stock Election Merger will qualify as a reorganization
pursuant to Section 368(a)(1)(A) of the Code,
(ii) no gain or loss will be recognized by Standard as a result of
the Stock Election Merger, and
(iii) no gain or loss will be recognized by a shareholder of
Standard who receives shares of Cooper common stock or a
combination of cash and shares of Cooper common stock as a
result of the Stock Election Merger except to the extent of
cash received.
The foregoing opinions are limited to the federal income tax
matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
state, locality or foreign jurisdiction. Our opinion is based on the relevant
provisions of the Code and on administrative interpretations, judicial decisions
and regulations thereunder or pertaining thereto as in effect on the date of
this letter. These authorities are subject to change, which could be either
prospective or retroactive in nature, and we can provide no assurance as to the
effect that any such change may have on the opinion that we have expressed
above. We undertake no obligation to update the opinions expressed herein after
the date of this letter. This opinion is rendered to the addressee of this
letter and may not be relied on or referred to by any other person or entity or
by any addressee for any other purpose within the express written consent of
this firm. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "The
Merger--Material U.S. Federal Income Tax Consequences of the Merger" in the
Proxy Statement-Prospectus. In giving such consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
/s/ Baker & Hostetler LLP