By Ryu Jin
Staff Reporter
Halla Engineering & Construction plans to buy back Mando, the top South Korean auto parts manufacturer it sold in the aftermath of the Asian financial crisis a decade ago, according to the company Monday.
Mando has been put up for sale by its biggest shareholder Sun Sage, a consortium led by JP Morgan Partners and Affinity Equity Partners, which bought a 72.3-percent stake in the auto parts company for $446 million in 2000.
``We have agreed to buy back the 72.3 percent stake from the biggest shareholder,’’ a company official said before the preliminary deal was signed by Halla E&C Chairman Chung Mong-won in Hong Kong later in the day.
Other sources hinted that the sale of 5.39 million shares in Mando would realize 650 billion won ($686 million), or some 120,000 won per share, much lower than the widely expected takeover price of 1.2 trillion won.
As the second-largest shareholder of Mando, Halla E&C has engaged in negotiations with the Netherlands-headquartered Sun Sage since late last year to regain the control of the auto parts company, which virtually is the builder’s parent firm.
Halla E&C formed a consortium together with Kumgang Korea Chemical (KCC) and Korea Development Bank among others for the deal. Halla E&C, which owns a 17.9 percent stake, retains the right to buy the remaining shares from Sun Sage.
Halla Group was established by late Chung In-yung, the younger brother of Hyundai Group’s late founder Chung Ju-yung, in 1962. It grew to be the country’s 12th-largest business conglomerate before the 1997-97 financial crisis that hit Asia.
Unlisted Mando, which posted a net profit of 82.8 billion won on sales of 1.58 trillion won in 2006, went bankrupt in 1997 in the wake of the financial crisis. It has since recovered.
A ``tacit agreement’’ by Hyundai-Kia Automotive Group helped Halla E&C regain control of Mando, one of the sources said. ``Hyundai family’s support including KCC’s participation in the consortium also greatly contributed to the deal.’’
Mando, which makes brake and steering systems, sells most of its products to Hyundai Motor and Kia Motors, led by Chung Mong-koo, the eldest son of the late Hyundai Group founder.