April 18, 2024

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[THE INVESTOR] Shanghai Aerospace Industry Corporation, a Chinese firm that specializes in aerospace and automotive, reportedly made the highest bid to acquire a controlling 42 percent stake in local tire maker Kumho Tire, according to local media Maeil Business on Nov. 29. 

Citing unnamed industry sources, the report noted that SAIC offered the largest amount in the preliminary round for Kumho Tire sale, becoming the strongest contender in the deal. The exact amount, however, has not been disclosed.

A total of five firms have been shortlisted for the sale that could fetch as high as 1 trillion won (US$855.80 million), when management premiums are added. They include SAIC, Indian tire maker Apollo Tyre, Chinese tire maker Qingdao Doublestar, Jiangsu GPRO Group and Linglong Group.

While the preliminary offer is legally non-binding, it reflects the buyer’s interest in the takeover. SAIC is a subsidiary of China’s state-owned China Aerospace Science and Technology Corporation. If SAIC acquires the Kumho Tire stake, it is expected to expand its tire business by creating synergy with Shanghai Aerospace Automobile Electromechanical, in which SAIC owns 28.3 percent stake, industry watchers say.

The decision will depend on whether Kumho Asiana Group Chairman Park Sam-koo will exercise his right of first refusal in the sell-off that allows him to repurchase the stake under the same terms as the highest bidder.

The final round of bidding is expected to take place in January next year.

By Ahn Sung-mi (sahn@heraldcorp.com)