German automotive firm Continental AG’s interest in acquiring local tire company Kumho Tire has increased the pressure on Kumho Asiana Group chairman, as he has to solely prepare around 1 trillion won ($8.6 billion) to reacquire the firm.
Local news reports said Tuesday Continental is in talks with financial investors to participate in the bidding for the Korean tire company, citing sources from the creditors of Kumho Tire. Other global firms, including French tire firm Michelin and Chinese state-owned chemical company ChemChina, also reportedly expressed their interest in bidding.
Although Korea Development Bank -- one of the main creditors -- denied the news reports on Tuesday night, market expectations raised the stock price of Kumho Tire up 9.8 percent to 10,850 won the following day.
Analysts said the tire company is an attractive buy as it has several plants in China where the government is recently limiting global firms from setting up plants.
The global firms’ interest in the Korean tire maker, however, is placing more burden on Park Sam-koo, chairman of Kumho Asiana Group, who has expressed strong willingness to rebuy the tire company, which is the only manufacturer and the biggest income source within the group.
Park tried to prepare funds amounting to 1 trillion won for the bidding by setting up a special purpose company but the attempt was foundered by the creditors, who said that “the indirect way of acquisition may bring down the value of Kumho Tire.”
Both Kumho Tire and Continental AG Korea declined to comment as the public notice of sale has not yet been announced.
By Shin Ji-hye (
shinjh@heraldcorp.com)
