Preferred Kumho Tire bid to be chosen next week

Final bids to acquire a 42.01 per cent shareholding in Kumho Tire are in, and Credit Cuisse, who has managed the deal, has requested additional time in order to review the bidders’ documents. Pulse, Maeil Business Newspaper’s English-language website, posits that the preferred bidder will be picked between 16 and 18 January, and the terms then sent to Kumho Asiana chairman Park Sam-koo.

Although five companies – Apollo Tyres, Shanghai Aerospace Industry Corp. (SAIC), Jiangsu GPRO Group, Shandong Linglong Tire and Doublestar Tyre – were expected to bid for the stake in Kumho, several media sources, including BusinessKorea and the Korea JoongAng Daily, indicate that this shortlist has been whittled down to three names, with Apollo Tyres and Linglong Tire no longer in the running.

BusinessKorea writes that industry experts have identified two of the three Chinese companies, DoubleStar and SAIC, as the “big players” in the bidding. While SAIC submitted the highest offer in the initial round of bids, the publication shares information on moves by DoubleStar to form a private equity fund worth more than KRW 1.4 trillion (£970.1 million) to acquire Kumho Tire; Pulse writes that the fund is worth KRW 1.7 trillion (£1.2 billion). DoubleStar is said to have submitted a bid of around Krw 1 trillion (£692.9 million).

Pulse quotes a banking industry source as stating “the three bidders are all eager and financially capable of acquiring Kumho Tire,” but the question is whether Park can match the best offer. The Kumho Asiana chairman spent more than KRW 700 billion rescuing Kumho Industrial the year before last, and his first right of refusal for the Kumho Tire share is restricted to his own financing and that of his eldest son Park Se-chang, who is in charge of strategic management within the Kumho Asiana group. Park is expected to decide whether or not to exercise his right of first refusal over the coming month.