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Hahn & Co. to put Korean auto parts maker up for sale

By Mar 19, 2021 (Gmt+09:00)

Hahn & Co. to put Korean auto parts maker up for sale 

South Korea's private equity firm Hahn & Co. is seeking to sell a majority stake in Hanon Systems, a Korean automotive supplier, which is expected to fetch at least 8 trillion won ($7 billion), more than twice the acquisition price.

The private equity house recently hired Morgan Stanley to manage the planned sale of a 70% stake in the heat pump component supplier, according to investment banking sources on Mar. 19. 

In 2014, Hahn & Co acquired the 70% stake in Hanon Systems for 3.8 trillion won, jointly with Hankook Tire & Technology Co., from Visteon Corp., a US automotive electronics supplier.

Their ownership was divided into 50.5% by Hahn & Co. for 2.8 trillion won, and 19.5% by Hankook Tire & Technology for 1 trillion won.

Their combined stake is estimated at at least 8 trillion won, including management premium, based on its Friday's market value of 9.2 trillion won. Hanon's 2020 EBITDA came to 847 billion won on sales of 6.9 trillion won. The stake sale is expected to become the country's largest acquisition deal.

Hanon Systems is the world's No. 2 thermal management systems supplier for automakers. Its clients include Volkswagen AG, Tesla Inc. and Hyundai Motor Group. 


Hanon System's battery-powered heater
Hanon System's battery-powered heater
To increase its value, Hahn & Co. made a bolt-on acquisition of the fluid pressure and controls business of Canada's Magna International Inc. for approximately $1.2 billion in 2018. The PEF also pumped more than 1.5 trillion into the company for the research and development of eco-friendly technologies.

Hanon manufactures electric compressors, refrigerant valves, internal heat exchangers and accumulators, as part of its heat pump system based on the Volkswagen modular electric drive matrix (MEB) platform.

The growing EV market is expected to increase demand for Hanon's battery thermal management systems, including battery chillers, used to maintain optimum battery temperatures. 

Industry watchers are paying close attention to whether LG Group, the country’s fourth-largest conglomerate, will put in a bid for the automotive supplier. 

In its efforts to venture into the auto industry, LG Electronics Inc. launched a vehicle component solutions business in 2013 and acquired Austria-based premium lighting systems maker ZKW in 2018.

Last year, LG Electronics agreed to form a $1 billion joint venture to build electric car components with Magna International Inc., the world’s No. 3 auto parts maker, to tap into the growing global demand for electric vehicles.

Write to Jun-ho Cha at chacha@hankyung.com

Yeonhee Kim edited this article.

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