Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Tirebank's bid complicates sale of Kumho Tire
Tirebank Chairman Kim Jung-kyu talks about his company's plan on the acquisition of Kumho Tire, during a press conference at the Daejeon Chamber of Commerce and Industry, Tuesday. /Yonhap
By Park Jae-hyuk
By Park Jae-hyuk
Tire retailer Tirebank declared a bid to acquire Kumho Tire, Tuesday, compounding the conundrum for creditors looking to dispose of the cash-strapped tiremaker.
Chairman Kim Jung-kyu, who heads Korea's largest tire retailer, told reporters he could not watch Kumho be taken over by China's Doublestar Tires.
“We have decided to seek the acquisition of Kumho Tire, with a sense of duty to protect the pride of Koreans,” the chairman said in a press conference at the Daejeon Chamber of Commerce and Industry. “The traditional manufacturer's downfall broke my heart. A Korean company should acquire Kumho Tire's factories in Korea at least.”
He vowed to develop Kumho Tire into the world's fifth-largest tiremaker, but maintained a cautious attitude toward a final decision on the acquisition, saying he will listen to the opinions of the public, creditors and the company's union.
Industry officials have regarded Kim's proposal as a mere marketing strategy to promote Tirebank, considering the Daejeon-based company's size and financial ability.
Established in 1991 as the nation's first company specializing in the retail tire business, the medium-size enterprise having 70 employees posted 372.9 billion won ($348 million) in sales and 66.4 billion won in operating profits in 2016.
Doublestar agreed with Kumho Tire's creditors to pay 646.3 billion won for its acquisition of the tiremaker.
The Chinese company has said it will invest the money in new Kumho Tire shares, which would allow it to become the largest shareholder with a stake of 45 percent. This would lower the Korea Development Bank (KDB) and other creditors' stake to 23.1 percent.
Kumho Tire said no Korean firm ― including Tirebank ― has offered an investment.
The KDB has dismissed Tirebank's proposal as an unrealistic one, saying Kumho Tire will be delisted or go into court receivership, unless its management and union reach an agreement on a self-rescue plan by March 30.
Kim said his company can raise enough funds to buy Kumho Tire, through Tirebank's initial public offering. He also suggested the creditors lend money to his company as a security.
“Several influential global companies, which are not based in China, proposed jointly acquiring Kumho Tire,” he said. “The creditors decided to invest 200 billion won, in case of Tirebank's acquisition, and the amount is large enough to save Kumho Tire's factories in Korea.”
However, the KDB said it will not lend money to Tirebank secured by the company.
Kumho Tire's union, which has opposed a foreign acquisition, welcomed Tirebank's announcement.
It said two more Korean companies are considering acquiring Kumho Tire, but declined to reveal their names.
In the meantime, Doublestar Chairman Chai Yongsen replied to a letter from Kumho Tire's non-union workers, who have supported the takeover. In the letter, Chai said he will guarantee Kumho Tire's independent management, job security and the right to collective bargaining.