The public takeover of Hankook & Company that was supposed to take place between the 5th and 25th of last month failed. This was after the bid by MBK Partners fell short of the minimum shares required. The application resulted in 8,388,317 against 19,315,214 shares.
The target was supposed to get MBK a stake of 20.35 percent of the company. The takeover was placed at a price of 24,000 won per share. However, the process was halted after failing to achieve the minimum target. This put an end to the ongoing power struggle.
The conflict is expected to carry on in the form of legal disputes. MBK filed a suit on Dec 15th requesting an investigation into the stock price adjustments that allowed honorary chairman Cho Hyun-rae and his father Cho Hyun-bum to secure a 4.41 percent stake.
According to MBK, it is alleged that Chairman Cho bought shares at a price higher than the closing price to fix Hankook’s stock price above the takeover price. Once the takeover bid was announced, the closing price dropped the next day and Chairman Cho was able to acquire 1.5 million shares, which was above the typical trading volume. Afterward, the company’s stock price resumed an upward trend.
As of now, Hankook Tire will retain its management rights but intends to request for financial investigations into the suspicions laid by MBK to prevent similar confusion in the future. There have been rumors that the significant market discrepancies that occurred before MBK Partners’ takeover announcement brought profit to some entities. Someone may have exploited undisclosed information for personal gain.
Currently, Chairman Cho is under trial. This is only adding fuel to the fire and may weaken his chances of remaining at the top in the near future. He was indicted and detained for embezzlement and breach of trust early last year but was released on bail. The legal risks are challenging his defense for management rights.