April 28, 2024

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Trucks deliver ready-mix concrete at a batching plant situated in Incheon on Sept. 26, 2023. SsangYong C&E raised the cement prices in October. (Newsis)

Hahn & Co., the nation's largest private equity firm based on assets under management, launched a bid on Monday to take full ownership of cement producer SsangYong C&E, offering over 700 billion won ($525 million) for the shares it does not hold.

Hahn & Co. will offer 7,000 won per share for the cement producer to secure an additional 20.1 percent stake in the company, spending 701.8 billion won, according to an announcement made through regulatory filings from its special purpose company and SsangYong C&E. This tender offer began Monday and ends March 6.

Backed by the buyout firm's tender offer announcement, SsangYong C&E's share price closed at 6,940 won on Monday, nearing the proposed price. This shows a slight increase from the previous trading session’s close at 6,410 won.

If the tender offer goes as planned, SsangYong C&E, worth 3.4 trillion won, is likely to be delisted from the Kospi, Korea’s main bourse. According to Korea Exchange regulations, the dominant shareholder should hold at least 95 percent of the shares of a company to opt for delisting.

“Through the acquisition of the leftover shares of SsangYong C&E, we hope to make it into a wholly owned subsidiary,” the bidder said through public disclosure. “As a result, a delisting of common shares is expected.”

According to regulatory filings, while Hahn & Co. holds 77.68 percent of the shares in the cement producer, the National Pension Service holds a 5.06 percent stake, and treasury shares account for 1.4 percent. Some 0.37 percent of the shares are held under employee stock ownership and executives own 0.06 percent, with 14.44 percent held by unidentified investors.

The private equity firm has put 1.43 trillion won into the cement maker already. In 2016, the buyout company acquired a 46.14 percent controlling stake in the cement maker, injecting 883.7 billion won through a blind fund. It further acquired an additional 32.36 stake that was held by Japan's Taiheiyo Cement for 454.8 billion won.

Having been acquired by Hahn & Co., SsangYong C&E logged record-high sales of 1.96 trillion won in 2022.

With the rise of cement prices, its sales in the first half of 2023 soared to 1.04 trillion won, up 184.5 billion won from the same period in the year before. Yet its operating profit stood at just 47.5 billion won, down 4.9 billion won.

This is not the first tender offer launched by Hahn & Co. The company went for two tender offers in 2023 to buy the leftover shares of medical device maker Lutronic, its portfolio company. After securing a 100 percent stake in the company, it pulled the company off the Kosdaq, Korea's secondary bourse.

The private equity firm has been making bold investments in recent months.

On Friday, it announced it has acquired 100 percent stake in SKC's fine ceramics business for 360 billion won. Under Hahn & Co.’s ownership, the business will be given a new name: Solmics.

In past six months, Hahn & Co. has executed 1.7 trillion won of investments, including the SKC deal, the firm said.

By Im Eun-byel (silverstar@heraldcorp.com)