2023-12-15 13:04:27
MBK tender offer requires purchase order of 20.35% or more
‘SOS’ requests the Financial Supervisory Service to investigate allegations of market manipulation
Chairman Cho’s side pleads, “Defend the management rights of the stake company at the market price.”
Cho Hyun-beom (left), the second son of Korea & Company Group honorary chairman Cho Yang-rae, and the eldest son Cho Hyun-sik, advisor to the chairman of Hankook & Company. Photo provided by Korea & Company
MBK Partners, a private equity fund management company that has been pursuing a hostile merger and acquisition (M&A) of Hankook & Company (000240), the holding company of Hankook Tire Group, suddenly raised the tender offer price on the 15th, but “the probability of the tender offer being successful is low,” financial sources said. This is a general analysis of the investment industry. This is because it is known that Cho Hyun-beom, chairman of Korea & Company, joined hands with his father, honorary chairman Yang-rae Cho, to purchase additional shares and secure friendly forces, nearly reaching a majority stake of ‘50% + 1 share’.
MBK, which has joined hands with Cho Hyun-sik, advisor to Hankook & Company, who is engaged in a management rights dispute with his younger brother, is attempting to turn things around by demanding that the Financial Supervisory Service investigate Honorary Chairman Cho, who purchased additional shares during the tender offer period, on charges of market manipulation. However, the actual founder of the Hankook Tire Group Since Honorary Chairman In Cho stepped forward to defend management rights, the observation that there are clear limits is gaining weight.
According to the Korea Exchange, Korea & Company closed trading at 15,850 won, down 25.06% on this day. It is lower than the closing price (16,820 won) on the 4th of this month, the day before advisor Cho Hyun-sik and MBK started the tender offer.
Earlier, on the 5th, the first day, MBK announced that it would launch a tender offer for at least 20.35% and up to 27.32% of Korea & Company’s shares with Honorary Chairman Cho’s eldest son, Advisor Cho (18.93% stake) and eldest daughter Cho Hee-won (10.61%). Korea & Company’s price soared to the upper limit, well exceeding the tender offer price of 20,000 won. The stock price, which had been over 20,000 won since then, plummeted as soon as the market opened that day due to the news of Honorary Chairman Cho purchasing shares.
Honorary Chairman Cho purchased 2,583,718 shares (2.72%) of Korea & Company stock six times starting on the 7th, increasing the shareholding ratio of Chairman Cho and his related parties from 42.89% to 45.61%. In addition, it is reported that Chairman Yoon Ho-jung (formerly Korea Yakult), who is close to Chairman Cho, acted as a white knight and secured a 1-2% stake in Korea & Company.
As a result, it became virtually difficult for Advisor Cho and MBK to secure more than 50% of shares in Korea & Company to secure management rights. Honorary Chairman Cho said on the 12th, “We will make sure to resolve management rights disputes so that they never arise once more,” and there is a possibility that he may have begun purchasing additional shares.
For this reason, MBK raised the tender offer price from 20,000 won to 24,000 won per share on this day, but even if it sweeps away the shares of institutions, foreigners, and individuals for 5 business days from the 18th, it will still retain the minimum stake of 20.35% for executing the tender offer. It is unclear whether it can be secured. An industry official emphasized, “MBK must receive a purchase order for a tender offer of 20.35% or more in order to make an actual purchase, so the investment method of responding to the tender offer by purchasing Hankook & Company stocks through catch-up purchases is very risky.”
While MBK is making every effort to make the Korea & Company tender offer a success, it is also seeking a last-minute reversal by requesting the Financial Supervisory Service to investigate the purchase of shares by Honorary Chairman Cho and others. On this day, MBK submitted a request to the Financial Supervisory Service to investigate violations of the Capital Markets Act, claiming that Honorary Chairman Cho and Chairman Cho’s friendly forces, hy, had acquired a large amount of shares in Korea & Company and caused the tender offer to fail. MBK claims that Honorary Chairman Cho bought a large amount of outstanding stocks and boosted the stock price to over 20,000 won.
However, although it is unclear whether the Financial Supervisory Service will side with MBK, the prevailing analysis is that it will be difficult to legally challenge the owner and manager who purchased stocks at market price to defend management rights.
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