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[Exclusive] Stake sales

Halla to join bid for Hanon Systems stake; seen biggest deal in Korea

Potential bidders seek consortiums to raise winning chances

By May 21, 2021 (Gmt+09:00)

Halla to join bid for Hanon Systems stake; seen biggest deal in Korea

South Korea’s Halla Group is joining the race for the purchase of auto parts supplier Hanon Systems Corp. -- a deal, if reached at the top end of the estimated value, would be the country’s largest acquisition transaction.

According to investment banking sources on May 21, Halla is seeking to partner with the state-run Korea Development Bank to help finance its bid for up to 69.9% of Hanon, a deal estimated at around 7 trillion won ($6.2 billion).

Halla and the state bank are in talks to launch a fund to attract investors interested in the Hanon stake up for sale, the sources said.

“Halla is the former owner of Hanon. The company seems to be determined to regain the control of the auto parts maker,” said an investment banking industry official.

A Halla Group official said they have considered bidding for the stake, but “nothing has been decided yet.”

Halla, a Korean conglomerate engaged in automobile components, construction and sports businesses, established in 1986 a joint venture, the predecessor of Hanon Systems, with Ford Motor Co. of the US.

The JV was later sold to Visteon Corp., a Ford affiliate, and in 2014 was taken over by Hahn & Co., a Korean private equity investment group, and Hankook Tire & Technology Co. for 3.8 trillion won.

Hanon’s current owners – Hahn & Co. and Hankook Tire – have put up their combined 69.9% stake for sale to exit from their investments and book gains.

Hahn & Co. is the largest shareholder of Hanon Systems with a 50.5% stake and Hankook Tire is the second-largest stakeholder with a 19.49% stake.

Last week, their joint sale managers, Morgan Stanley and Evercore Inc., issued an information memorandum to potential bidders with preliminary bidding slated for mid-June.

Halla to join bid for Hanon Systems stake; seen biggest deal in Korea


Industry watchers said several auto parts makers, including Germany’s Continental AG, and global private equity firms such as KKR, Carlyle and TPG are showing interest in the Hanon Systems stake and seeking to form consortiums with strategic and financial investors to raise their chances of winning the bid.

It is understood that Carlyle has approached LG Electronics Inc. to set up a consortium.

Hanon manufactures and sells a wide range of products, including air conditioners, heaters, cooling modules and compressors. The company is the world's No. 2 thermal management systems supplier for automakers after Japan’s Denso.

In the electric vehicle era, superior thermal management systems are essential to regulating energy efficiency. The growing EV market is expected to increase demand for Hanon's battery thermal management systems.

Hanon's high-profile client portfolio is another attractive factor. Its clients include Korea's leading automakers Hyundai Motor Co. and Kia Corp., alongside global auto firms such as Ford, Volkswagen, GM and Tesla.

The company’s market capitalization stands at 8.7 trillion won, valuing its near 70% stake at around 7 trillion won, including the management premium.

Write to Ji-Hye Min and Jun-Ho Cha at

In-Soo Nam edited this article.

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