MBK Partners, Asia’s largest private equity firm, has escalated its bid to acquire a controlling stake in Hankook & Company, the parent entity of Hankook Tire & Technology Ltd., Korea's leading tire manufacturer. This development, marked by a heightened offer on 17 December, is set against a backdrop of a family feud within Hankook & Company.
MBK Partners has raised its offer to buy a minimum of 20.35% and a maximum of 27.32% of Hankook & Company by 20%, bringing the offer to 24,000 won ($18.40) per share, a significant jump from the initial 20,000 won offer. This revised price is notably 51.4% higher than Hankook & Company's closing price on the preceding Friday.
This move comes amidst a heated battle for control within the founding family of Hankook & Company. MBK Partners aligns itself with Cho Hyun-sik, the eldest son and adviser to Hankook & Company, and his sister Cho Hee-won. They are challenging the current chairman and their younger brother, Cho Hyum-bum. The escalation in MBK's bid followed the intervention of Cho Yang-rai, the honorary chairman and family patriarch, who sided with his younger son, Cho Hyum-bum.
MBK's increased offer is a response to Cho Yang-rai's acquisition of additional shares to strengthen his youngest son's position in the company. This move by the patriarch caused a 25% plunge in Hankook & Company’s share price. MBK also requested an investigation into the honorary chairman’s share purchases, alleging price manipulation.
If successful, MBK’s tender offer would significantly increase the stake of the older Cho and his allies in the company. MBK, emphasizing the unrealized corporate value of Hankook & Company under current governance, views this acquisition as a step towards harnessing the company's strong fundamentals and high potential, especially in the burgeoning electric vehicle market.
This hostile merger attempt is relatively unusual for MBK, and it has generated skepticism among industry observers. From MBK's perspective, the limitations in Hankook & Company's business expansion due to legal risks associated with its current chairman, who faces charges of bribery and embezzlement, play a key role in their aggressive bid. However, there are speculations about MBK's broader intentions, with suggestions that this bid could signal an interest in acquiring stakes in even larger family-owned conglomerates.
