Hankook Tire to enter car parts business

Hankook Tire, the nation’s largest tiremaker, will soon participate in the management of Halla Visteon Climate Control Corp., having acquired a 19.49 stake for 1.08 trillion won ($983.84 million) in December, to diversify its business domain into the car parts sector.

HVCC is a global supplier of automotive thermal management solutions and partners with car manufacturers worldwide, most of which are clients of Hakook Tire.

Hankook Tire recorded solid growth last year, posting about $6.3 billion in sales and $979 million in operating profit. But many stock analysts recommended a “hold” for investors this year, pointing out growing challenges from cheap Chinese tires. 

To step up its expansion into the new business, tiremaker CEO Cho Hyun-bum, the younger son of Hankook Tire Group chairman Cho Yang-rae, will secure a seat in the board room of HVCC through votes at the AGM to be held on March 30, according to a legal filing to the financial authority on March 15.

HVCC will be run by the “HVCC management committee,’’ which will be composed of incumbent board members and new members, including Cho and a representative of Han & Company, a local private equity firm. Han & Company became the largest shareholder of HVCC after it took a 50.5 percent stake in the car parts-maker in December.

“Cho’s fast move was expected as he is in a tight race for the group succession with his older brother,’’ a stock analyst said.

Cho Hyun-sik, the eldest son of the group chairman and president of Tire Worldwide, the holding company of the group, has driven business expansion in non-tire business.

He had led the bid to take over KT Rental, the nation’s largest auto rental company, but lost to Lotte Group last week, which bid 1.02 trillion won.

Industry watchers predicted the Tire Worldwide CEO will soon prepare for other M&A deals in non-tire sectors to prove his competency in management.

“Succession is not an imminent issue at Hankook Tire Group, but the competition between the two brothers will accelerate,’’ an industry insider predicted.

The chairman currently controls the group, holding a 25.59 percent stake in Tire Worldwide. The two sons each have around a 19 percent stake in the firm.

By Seo Jee-yeon (jyseo@heraldcorp.com)