2023-12-17 00:22:30
Increased by 20% from 20,000 won to 24,000 won per week.
There is also a request for the Financial Supervisory Service to investigate Cho Yang-rae’s large-scale purchase of shares.
Chairman Cho Hyun-beom has a lot of friendly shares, so it’s easy to turn it around.
MBK with the ‘Flower Festival’… Show off your presence even if you fail
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
The fight over management rights to Hankook & Company (000240) (formerly Hankook Tire Group) between the second son, Hankook & Company Chairman Cho Hyun-beom, and the eldest son, Hankook & Company advisor Cho Hyun-sik, is becoming increasingly fierce. As his father, Cho Yang-rae, honorary chairman of Korea & Company, came to support Chairman Cho, the victory seemed to be on the rise, but the private equity fund MBK Partners, which recently joined hands with Advisor Cho, responded by raising the tender offer price, and it was assessed that the ‘brothers’ rebellion’ had entered a new phase. no see. Today at Sunday Money Cafe, we will look at whether MBK Partners’ increase in the tender offer price has increased the possibility of a hostile merger and acquisition (M&A) against Korea & Company, and whether the ‘Brothers’ Rebellion’, which has reoccurred after two years, will be successful.
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Tender offer price increased by 20% from 20,000 won per share to 24,000 won
MBK Partners announced that it would increase the Korea & Company tender offer price from 20,000 won to 24,000 won after the market closed on the 15th, the last day to change the tender offer conditions. The price is 51.4% higher than the closing price of 15,850 won that day. This means that if you respond to the tender offer at the current price, you can make a profit of about 50%. Existing shareholders have greater incentive to participate in the tender offer. The maximum tender offer price increased from 518.6877 billion won to 622.42524 billion won.
Recently, Chairman Cho’s allies, including Chairman Cho’s father, Honorary Chairman Cho, and Hy (Korea Yakult), have expanded their shares, increasing the possibility of Chairman Cho defending his management rights. As such, MBK Partners is making a last-ditch bid by suddenly raising the tender offer price. It’s possible. Previously, MBK conducted a tender offer starting on the 5th with Honorary Chairman Cho’s eldest son, Advisor Cho (18.93%), and his second daughter, Cho Hee-won (10.61%), competing for shares with Chairman Cho, leading to the so-called ‘second brother’s rebellion.’ ‘I joined. Honorary Chairman Cho, who identified his second son, Chairman Cho, as his successor, announced on the 14th that he had recently purchased 2.72% of Korea & Company’s shares six times, increasing the shareholding of Chairman Cho and his related parties from 42.89% to 45.61%. Accordingly, Korea & Company’s stock price plummeted from the start of the market on the 15th, falling by about 25%. The market judged that Chairman Cho had virtually won the management rights dispute by securing about 50% of the shares, including friendly shares.
MBK, which joined hands with Advisor Cho, appears to be planning to use the plunge in Korea & Company’s stock price as a stepping stone to increase its stake by raising the tender offer price. MBK is known to be planning to secure 20.35-27.32% of Korea & Company’s issued shares through a tender offer. If the tender offer is successful, MBK will be able to secure 50.0% to 57.0% of the shares of Korea & Company, including the shares of Advisor Cho (18.93%) and second daughter Hee-won Cho (10.61%) of the owner family.
Cho Hyun-beom, Chairman of Korea & Company
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Hyun-beom Cho’s stake approaches 50%… “The probability of successful tender offer is low.”
Although MBK Partners suddenly raised the tender offer price, the general analysis in the financial investment industry is that “the probability of the tender offer being successful is low.” 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’.
In addition, MBK is attempting to reverse the situation by requesting the Financial Supervisory Service to investigate Honorary Chairman Cho, who purchased additional shares during the tender offer period, on charges of market manipulation. There is also strength in the observation that is clear. Honorary Chairman Cho purchased 2,583,718 shares (2.72%) of Korea & Company stock six times starting from the 7th of this month, 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-joong (formerly Korea Yakult), who is close to Chairman Cho, acted as a white knight and secured a 1-2% stake in Korea & Company.
Accordingly, it is assessed that it has become virtually difficult for 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 definitely resolve management rights disputes so that they never arise again,” raising the 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.”
Cho Yang-rae, Honorary Chairman of Korea & Company. yunhap news
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MBK with the ‘Flower Festival’… Show off your presence even if you fail
MBK Partners logo. Photo = MBK Partners
The market says MBK has nothing to lose in this management dispute. This is because MBK has a drag-along clause that allows it to bundle and sell the shares of Advisor Cho and Hee-won Cho when a prospective buyer emerges if the tender offer is successful. If the tender offer is successful, it will be possible to sell a global top 10 tire company (Hankook Tire & Technology (161390)) and make a large investment profit.
The conditions are also known to be favorable to MBK. According to the shareholder agreement, Advisor Cho and MBK decided not to jointly exercise voting rights with Chairman Cho, the largest shareholder of Korea & Company, without the consent of the other party. Advisor Cho also promised not to dispose of stocks held by MBK to a third party without MBK’s consent.
In particular, if MBK secures more than 50% of Korea & Company’s shares, it will be able to nominate more than half of the total number of directors. The CEO decides to negotiate, but if an agreement is not reached, MBK has the right to appoint. An official in the financial industry said, “For MBK, even if this tender offer fails, it can show off its presence.”
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Possibility of a counter-buy from Chairman Cho’s side… “Stock prices fluctuate”
There are also predictions in the industry that Korea & Company’s stock price will fluctuate if Chairman Cho’s side makes a counter purchase again to protect management rights.
On the 15th, Korea & Company’s stock price closed at 15,850 won, down 25.06% from the previous day. It is lower than the closing price (16,820 won) on the 4th of this month, the day before Cho Hyun-sik, advisor at Korea & Company and private equity fund manager MBK Partners, began the tender offer.
Earlier, when MBK announced that it would initiate a tender offer for at least 20.35% and up to 27.32% of shares in Hankook & Company with Honorary Chairman Cho’s eldest son, Advisor Cho, and eldest daughter Cho Hee-won, on the 5th, the first day, Hankook & Company soared to the upper limit and made a tender offer. The unit price was well over 20,000 won. Since then, the stock price, which had been over 20,000 won, plummeted at the start of the day due to the news of Honorary Chairman Cho’s purchase of shares, falling below 20,000 won in 9 trading days. As the two sides continue to battle over the purchase of shares, the controversy is expected to grow by the end of this month.
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