MBK’s tender offer requires a purchase order of 20.35% or more
‘SOS’ asks the Financial Supervisory Service to investigate allegations of market manipulation
Chairman Cho’s side pleads, “Protect the management rights of the stake company at the market price.”
Cho Hyun-beom (left), the second son of the honorary chairman of Korea & Company Group Cho Yang-rae, and the eldest son Cho Hyun-sik, an adviser to the chairman of Hankook & Company. Photo provided by Korea & Company
MBK Partners, a private equity fund management firm that has been pursuing a hostile merger and acquisition (M&A) of Hankook & Company (000240), the holding company of Hankook Tire Group, suddenly raised the tender offer price on the 15th, but “the the probability of the tender offer being successful is low,” said financial sources, a general analysis of the investment industry. This is because Cho Hyun-beom, Chairman of Korea & Company, is known to have teamed up with his father, Honorary Chairman Yang-rae Cho, to buy additional shares and secure friendly forces, and is close to holding a majority stake of ‘50% + 1 share’.
MBK, who has teamed up with Cho Hyun-sik, an adviser to Hankook & Company, who is involved in a management rights dispute with his younger brother, is trying to turn things around by demanding that the Financial Supervisory Service investigate the Honorary Chairman Cho, who bought additional shares during the tender offer period, on charges of manipulating the market. However, the real founder of the Hankook Tire Group Since the Honorary Chairman In Cho stepped forward to protect management rights, the comment that clear limits is gaining weight.
According to the Korea Exchange, Korea & Company closed trading at 15,850 won, down 25.06% on this day. It is lower than the closing price (16,820 won) on the 4th of this month, the day before adviser Cho Hyun-sik and MBK started the tender offer.
Earlier, on the 5th, the first day, MBK announced that it would launch a tender offer for at least 20.35% and up to 27.32% of the shares of Korea & Company with Honorary Chairman Cho’s eldest son, Advisor Cho (18.93% share) and the eldest daughter Cho Hee-won (10.61%) The price of Korea & Company rose to the upper limit, much higher than the tender offer price of 20,000 won. The stock price, which had been over 20,000 since then, plunged as soon as the market opened that day on the news that Honorary Chairman Cho was buying shares.
Honorary Chairman Cho purchased 2,583,718 shares (2.72%) of Korea & Company stock six times starting on the 7th, increasing the shareholding ratio of Chairman Cho and his related parties from 42.89% to 45.61%. In addition, Chairman Yoon Ho-jung (formerly Korea Yakult), who is close to Chairman Cho, is reported to have acted as a white knight and secured a 1-2% stake in Korea & Company.
As a result, it became almost difficult for Advisor Cho and MBK to secure more than 50% shares in Korea & Company to secure management rights. Honorable Chairman Cho said on the 12th, “We will ensure that we resolve management rights disputes so that they never arise again,” and there is a possibility that he may have started buying additional shares.
For this reason, MBK raised the tender offer price from 20,000 won to 24,000 won per share on this day, but even if it sweeps away the shares of institutions, foreigners and individuals for 5 business days from the 18th, it will still retain the minimum share of 20.35% for the execution of the tender offer It is not clear whether it can be secured. An industry official emphasized, “MBK must receive a buy order for a tender offer of 20.35% or more in order to make an actual purchase, so the investment method of responding to the tender offer by buying Hankook & Company stocks through holding purchases up very dangerous.”
While MBK is making every effort to ensure that Korea & Company’s tender offer is a success, it is also seeking a last-minute reversal by asking the Financial Supervisory Service to investigate the purchase of shares by Honorary Chairman Cho and others. On this day, MBK submitted a request to the Financial Supervisory Service to investigate violations of the Capital Markets Act, alleging that Honorable Chairman Cho and Chairman of friendly forces Cho, ie, acquired a large amount of shares in Korea & Company and caused the tender offer failed. MBK claims that Honorary Chairman Cho bought a large amount of outstanding stocks and boosted the stock price to over 20,000 won.
However, while it is not clear whether the Financial Supervisory Service will side with MBK, the general analysis is that it will be difficult to legally challenge the owner and manager who bought stocks at market price to protect management rights.
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