With Cho Hyun-sik, the advisor of Hankook & Company and the eldest son of the tire maker’s honorary chairman, preparing to take over the leadership in collaboration with MBK Partners, Cho Yang-rae, the honorary chairman of Hankook & Company, is once again offering support to Chairman Cho Hyun-bum, to whom he transferred managerial authority.
According to the Financial Supervisory Service’s electronic disclosure on Dec. 14, Honorary Chairman Cho acquired 2,583,718 shares, or 2.72% ownership, of Hankook & Company, the holding company of the group, from Dec. 7 to date. The average purchase price was 22,056 won per share. In short, Honorary Chairman Cho injected 57 billion won (US$44.08 million) of his own money to defend the management control of Chairman Cho, his second son.
Honorary Chairman Cho’s recent acquisition of shares in Hankook & Company marks the first time since June 2020 when he transferred his entire stake to Chairman Cho. With the recent stock purchase, Honorary Chairman Cho has been officially listed as a special related party in connection with Chairman Cho. As a result, the combined ownership stake of Chairman Cho and the special related party now stands at 45.61%, a significant increase from the previous 42.03%, solidifying their joint control over management rights.
With the addition of Chairman Cho’s amicable shares, it is anticipated that there will be no significant obstacles in defending against the efforts by his brother and MBK Partners to seize control of the company.
Chairman Cho attended the trial at the Seoul Central District Court in Seocho neighborhood of Seoul, related to allegations of unjust support and embezzlement on the same day. During a meeting with reporters, he displayed confidence in his ability to defend against the management takeover attempt, stating, “Considering the contractual structure, there is nothing for the private equity fund to lose. We are concerned if the aggressive attempt by MBK Partners will have an adverse effect on individual investors. The defense preparations for management control are complete, and there is ample financial capability.”
On the other hand, MBK Partners, in collaboration with Cho Hyun-sik, the advisor with a stake of 18.93%, and Cho Hee-won, the honorary chairman’s second daughter with a stake of 10.61%, is currently engaged in a public takeover bid to secure management control of Hankook & Company. The plan is to publicly acquire a minimum of 20.35% of Hankook & Company shares at 20,000 won per share until Dec. 24. If the public acquisition succeeds, MBK’s ownership stake will surpass 50%, providing control over the management.
However, there are concerns that the public takeover bid could face challenges, given that the share price of Hankook & Company had already exceeded 20,000 won as of the closing price on the Dec. 14, reaching 21,150 won.