Hankook vows to prevent hostile bids after MBK tender offer fails

Hankook & Company Co., the holding company of South Korea’s largest tire maker Hankook Tire & Technology Co., said on Tuesday it will endeavor to avoid a repeat of a hostile takeover after MBK Partner’s recent tender offer failed.

Early this month, MBK announced that it would buy Hankook & Company shares in the market to secure a stake between 20.35% and 27.32% by Dec. 25. To raise the odds of its success, it increased the offer price to 24,000 won ($18.5)  from 20,000 won per share.

If all had gone to plan, MBK would have won control of the tire manufacturing group, along with the takeover supporter: Cho Hyun-sik, the eldest son of Hankook’s honorary Chairman Cho Yang-rai and brother of its current Chairman Cho Hyun-bum.

However, the stocks of shareholders accepting MBK's bid amounted to just an 8.8% stake by Dec. 22, the last working day before the Christmas holiday, and the private equity firm abandoned its takeover bid.

Breathing a sigh of relief, Hankook said in a statement: “We respect the shareholders’ judgment on this tender offer. We will actively work to increase shareholder value.”

Simultaneously, it will ask financial regulators to probe a possible link between MBK’s tender offer and the block trade of its shares in August this year, which had driven the share price sharply higher, the company said.

It has not decided yet which institutions it will report to financial authorities for probes and for which period.

NOT OVER YET

However, it ain’t over till it’s over. MBK has hinted that it might take action against Hankook again in the future.

“There is no change in our position that governance improvement is more important than anything else. We will continue to monitor (the situation at Hankook & Company),” MBK said.

When it launched the aborted tender offer, MBK had said it sought to enhance Hankook’s corporate governance and shareholder value.

The failed hostile bid was viewed as a proxy war between the two sons of Hankook’s honorary chairman after his second son Cho Hyun-bum took over its management.

Hankook Chairman Cho is undergoing trial on charges of embezzlement and misappropriation worth about 20 billion won ($15 million). He was released on bail last month.

The share price of Hankook & Company rebounded to close 56% higher at 16,800 won on Tuesday, below the tender offer price of 24,000 won. 

Write to Il-Gue Kim at Black0419@hankyung.com
 

Yeonhee Kim edited this article.