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Battle for Control Intensifies at Hankook & Company Amid Rivalry and Raised Bid by MBK Partners

South Korea
h 161390.KO Mid and Small Cap 2000 Consumer 250
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The struggle for control over Hankook & Company, the holding firm of Hankook Tire & Technology Co., South Korea’s largest tire maker, has reached a new peak. Private equity firm MBK Partners Ltd. has escalated its efforts to gain management control by increasing its bid for the parent company. Concurrently, the firm has called for a regulatory investigation into share purchases by the company’s honorary chairman, Cho Yang-rai.

MBK Partners filed a request with the Financial Supervisory Service, alleging that Cho Yang-rai’s extensive buying of Hankook & Company shares might constitute a violation of Korea’s Capital Market Act. The private equity firm suggests that Cho’s actions, aimed at inflating the company’s share price, were intended to obstruct MBK’s acquisition bid.

Cho Yang-rai recently acquired 2.58 million shares of Hankook & Company, amounting to a 2.72% stake, for 57 billion won ($44 million). This move is viewed as a strategic effort to support his younger son, Cho Hyun-bum, the current chairman, amidst the intensifying family feud for control of the company.

The company’s eldest son, Cho Hyun-sik, aligned with MBK Partners, seeks to oust his younger brother from the chairman’s position. Their joint effort involves purchasing shares at a raised bid price of 24,000 won per share, up 20% from the initial offer of 20,000 won. This bid aims to secure a majority stake in Hankook & Company, potentially shifting the balance of power within the firm.

This internal conflict has seen the company’s stock fluctuate significantly. The stock soared by 30% following MBK’s initial bid announcement, only to plunge by 26.2% after Cho Yang-rai’s public support for his younger son. This volatility reflects the market’s reaction to the ongoing power struggle and the uncertainty surrounding the company’s future leadership.

Amidst this turmoil, Hankook Tire’s labor union has voiced its opposition to any hostile takeover attempts, highlighting the broader implications of this corporate saga.

The outcome of this power struggle is set to be determined at Hankook & Company’s annual shareholders’ meeting in March, where the company’s shareholding as of December 28 will play a crucial role. The resolution of this dispute will be pivotal in shaping the future trajectory of Hankook & Company, a key player in the global tire market.

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