Hankook & Company shares plummet after honorary chairman buys huge stake
The headquarters of Hankook Tire & Technology in Seongnam, Gyeonggi Province. Courtesy of Hankook Tire & Technology
Shares of Hankook & Company lost over 25 percent in value Friday, essentially ending a feud over management control between Chairman Cho Hyun-bum and advisor Cho Hyun-shick.
They are the second and the eldest son of Cho Yang-rae, honorary chairman of the tire maker. Hankook & Company is the holding company of Hankook Tire & Technology.
Propelling the 25.05 percent plunge in the share price was the honorary chairman’s purchase of 56.9 billion won ($43.8 million) in Hankook & Company stocks, Thursday. He is believed to have over 500 billion in cash ready to help the current chair. The combined shares of the honorary chair and his second son will amount to well over 50 percent.
In June of 2020, the honorary chairman handed over his entire stake of 23.59 percent to the second son in an after-hours block deal before stepping down as chairman.
Friday’s purchase was in line with a pledge by the honorary chairman to protect the company even if it meant spending his own money.
“I will not let a private equity fund take over my firm I have built up from the ground my whole life,” the honorary chair said Tuesday during an interview with a local media outlet. “I will make sure a management dispute of this sort never occurs again.”
The comments were in apparent reference to private equity investment fund MBK Partners’ attempt to gain a controlling stake in Hankook & Company.
The private equity fund launched a public tender offer for Hankook & Company shares last week, seeking to acquire about 20.35 percent of total stocks.
MBK already has a combined stake of 29.54 percent in the company, backed by its major shareholders – the advisor and his sister, Cho Hee-won.
The initial tender offer price was set at 20,000 won per share, but MBK raised it to 24,000 won per share, Friday.
The Hankook & Company's share closed at 15,850 won, down 5,300 won from the previous session.
"The tender offer price is 51.4 percent higher than the closing price on Dec. 15," MBK announced.
"The corporate value of Hankook & Company, which has solid fundamentals and the potential for sustainable growth, will have difficulty being recognized under the current governance structure," it noted, adding that the tender offer is "the only and the last chance" to improve the corporate governance structure of Hankook & Company.