Kumho Asiana Group Chairman Park Sam-koo seems to have a new plan to acquire Kumho Tire that involves waiting until creditors fail to hand over the tiremaker to a preferred bidder in the next six months, industry insiders said Thursday.
Through an official document sent to creditors Wednesday, Park said that he would not buy back a 42.01 percent controlling stake in the country’s No. 2 tiremaker unless a definitive answer on the conditions of the sale is provided by Monday.
If Park chooses to forfeit the sale to Chinese tiremaker Doublestar, Kumho Tire creditors have to seal the 955 billion won ($831 million) deal within six months.
Kumho Asiana Group Chairman Park Sam-koo (Yonhap)
If the acquisition falls apart, Doublestar would lose its status as the preferred bidder and Park would be given a pre-emptive right to purchase the tire maker.
“Park’s latest move seems to be aimed at pressing the creditors to allow a consortium of strategic investors,” said Lee Sang-hyun, an analyst at IBK Securities.
“The move appears to have been based on calculations that the chances of creditors closing the deal with Doublestar are slim, due to conditions surrounding Kumho Tire.”
Doublestar may refuse to pay the full 955 billion won if it does not get to use Kumho Tire’s trademark, Lee said.
Creditors and Doublestar agreed on a 20-year use of the Kumho Tire trademark, which has not yet been negotiated with Kumho Industrial, which holds the trademark rights. It is important for the Chinese firm to access the Kumho Tire trademark, as Doublestar produces tires for commercial vehicles.
Kumho Tire’s labor union also went on strike in front of the state-run Korea Development Bank headquarters in western Seoul on Thursday, demanding one of the nine creditors to stop the acquisition.
The labor union is demanding job security for five years after Doublestar buys Kumho Tire, while the Chinese firm is seeking to decrease the period to two years.
The labor union reiterated that it would continue to take action until the demand is met.
Politicians from the opposition Democratic Party of Korea and the People’s Party also made an appearance at the labor strike to show support, further complicating the acquisition.
With the presidential election set to take place in four weeks, politicians have made the acquisition a political issue.
Public sentiment toward Doublestar taking over the local tiremaker remains sour on concerns of a technology leakage and amid tension over China’s economic retaliation against Korea’s hosting of a US missile defense system.
By Kim Bo-gyung (lisakim425@heraldcorp.com)
