MBK Goes Ahead with Hankook Takeover Amidst Management Issues

There has been a sibling rivalry in the ownership of Hankook & Company as MBK Partners, the advising private equity firm, continues to push for the acquisition of a controlling stake in the former.

The rivalry is between the sitting chairman and his siblings. The latter have partnered up with MBK to take over control of the company. The firm launched a public tender offer on December 5, 2023, to acquire a minimum of 20.35% and a maximum of 27.32% of Hankook.

The goal is to restructure and improve the tire manufacturer’s corporate governance, which has affected its potential growth and corporate valuation. According to MBK, the decline of Hankook is attributed to its poor structure accompanied by judicial risks from the largest investor.

Investors are betting against MBK, the eldest son Cho Hyun-sik, and his two sisters who are trying to take over management from their younger brother and current chairman, Cho Hyum-bum. Their father Cho Yang-rai is in support of the youngest son.

He has acquired more company shares together with those on his side to secure a controlling stake. They had more than 47% of shares as of last Friday. During the weekend, MBK Partners raised their public tender price to $18.48 (24,000 won) per share from 20,000 won.

The move was aimed at getting the investors on the equity firm’s side who were convinced that the conflict would end in favor of the current chairman due to the support from his father. The rivalry has escalated to a full-scale conflict and has been affecting the share price of Hankook Tires.

The public tender offer by MBK is scheduled to close on Monday. The results will be announced on Wednesday.