Application Missed
Doublestar, which is seeking to acquire Kumho Tire, hasn’t submitted an application for its defense business acquisition approval to the Ministry of Trade, Industry and Energy (MOTIE) as of July 2. The Chinese company had planned to apply for approval of the acquisition of Kumho Tire’s defense business by the end of June. Accordingly, market watchers say that the company might delay taking follow-up measures as the negotiation with Kumho Asiana Group Chairman Park Sam-koo over the use of Kumho trademark hasn’t completed.
According to the MOTIE on July 2, neither Doublestar nor Kumho Tire creditor hasn’t asked for cooperation or applied for approval of the sale of acquisition of Kumho Tire’s defense unit. Since Kumho Tire is categorized as a defense company which supplies tires for Korean military fighters and trainers, it needs to receive approval for the MOTIE to end the deal. Creditors and Doublestar agreed to apply for the approval to the MOTIE last month.
Doublestar established a special purpose corporation (SPC) in South Korea on June 13 to take over Kumho Tire, showing its strong intention for the acquisition. However, they haven’t sought to receive approval for the defense business acquisition from the MOTIE, raising much speculation. Investment banking sources say that Doublestar changed its stance and wait and see how the negotiation over the use of Kumho brand trademark will turn out as it still has difficulties in negotiating.
The creditors will hold its shareholders' meeting by the end of this week and discuss whether to raise the percentage of Kumho Tire's annual sales as brand royalties to 0.35 percent, which is a compromise between 0.2 percent and 0.5 percent of the two sides, and extend the mandatory period of the Kumho trademark use to 12 years and 6 months. Then, they will notify the results to Chairman Park.