MBK Partners’ Hankook & Company Acquisition Bid Collapses; Investigation on Advance Trading In the Offing

MBK Partners, a private equity firm focusing on business in North Asia, has failed to acquire Hankook & Company Co., Ltd. Its bid to buy a controlling stake in the Seoul-headquartered battery manufacturing firm, which is also the parent organization of Hankook Tire & Technology Company has come to nothing after its tender offer was not able to secure enough subscriptions.

MBK Partners Confirms Unsuccessful Deal

Korea Joongang Daily reported that although the subscription deadline was Monday, Dec. 25, the deal collapsed on Friday due to the Christmas holiday. In any case, the private equity firm had been demanding the corporate structure makeover for Hankook & Company, which it hoped to bag a controlling stake in.

“There was a meaningful subscription, but it could not reach our target,” MBK Partners’ MBKP Special Situation (MBKP SS), said in a statement. “Corporate structure reform is more important than anything. MBKP SS will continue to watch.”

MBKP SS which is leading the public tender offer, added that “Despite having a strong fundamental and potential for further growth, the corporate valuation of Hankook & Company has been declining due to its poor governance structure and the judicial risks from the largest investor.”

Investigation Request for Suspected Advance Trading

In connection to the collapse of the tender offer that MBK Partners put together in cooperation with Hankook & Company’s advisor Cho Hyun Sik to buy management rights, Yonhap News Agency reported the company said it is planning to request an investigation from the financial authorities due to suspicions of massive advance trading of Hankook & Company stocks. This is said to have caused a sudden increase in the stock price before MBK Partners tendered an offer.

The company also promised to make efforts to prevent any similar confusion related to management rights from happening again. “We respect the judgment of shareholders regarding this tender offer,” Hankook & Co. said. “We will actively work to enhance shareholder value in the future.”

Meanwhile, MBK Partners teamed up with Cho Hyun Sik and others in an attempt to buy over 19.32 million shares which is equivalent to 20.35% of Hankook & Company stocks, but in the end, the deal fell through.

Photo by: MBK Partners Website