Late last month, Hankook Tire and Technology Co. outlined plans to acquire shares valued at 1.37 trillion won ($1 billion) in Hanon Systems Corp., a leading global manufacturer of vehicle heat pump systems, from private equity firm Hahn & Co.
The deal involves Hankook’s parent entity, Hankook & Company Co., which will buy a 25% ownership in Hanon Systems. Hahn & Co., which is the biggest shareholder with a 50.5% stake, will see its share halved. They originally purchased their stake for 2.75 trillion won in 2015.
Moreover, Hankook Tire plans to spend an additional 365.1 billion won ($270.7 million) to acquire new shares in Hanon Systems, boosting their total ownership to 50.5%. This includes a prior investment where they bought 19.5% of the company in 2014 for 1.8 trillion won ($1.3 billion).
Hahn & Co., however, will not be investing in the new shares. Consequently, their share will drop to 22%, making them the second-largest shareholder after the share dilution. The agreement is expected to be completed by the end of this year. Once it goes through, Hankook & Company’s total assets are projected to increase by 50%, elevating them to the status of one of South Korea’s top 30 business groups.
This strategic move will bolster Hankook Tire’s involvement in the burgeoning electric vehicle sector by broadening their range of products. Hanon Systems specializes in producing essential components like battery thermal management systems and heat pumps, along with cooling fan motors that are crucial for both traditional combustion engines and electric vehicles (EVs). They stand as a significant competitor against major international companies such as Japan’s Denso, Germany’s Mahle, and Valeo.
Hanon Systems has an impressive list of clients, including automotive giants like Hyundai Motor Group, Ford, Volkswagen, BMW, and Mercedes-Benz. In 2023, the company reported an operating profit of 277.3 billion won ($205.5 million) from revenues totaling 9.56 trillion won ($7 billion). However, it has observed a decreasing trend in its profit margins over recent years, falling to 2.9% last year from 6% in 2019. This purchase is seen as a strategic expansion for Hankook, aiming to strengthen its position in the competitive electric vehicle market.