Hankook Tire buys $1 bn Hanon Systems stake from Hahn & Co.

With the deal, the tire maker will become Hanon's largest shareholder with a 50.5% stake

Hanon Systems' modular car platform for electric vehicles supplied to Volkswagen

Jae-Fu Kim and Jin-Won Kim 1

2024-05-03 18:54:02 hu@hankyung.com

Mergers & Acquisitions

Hankook Tire and Technology Co. on Friday reached a preliminary agreement to buy 1.37 trillion won ($1 billion) worth of shares in Hanon Systems Corp., the world’s second-largest heat pump systems maker for automobiles, from private equity firm Hahn & Co.

The tire maker’s holding firm Hankook & Company Co. signed a memorandum of understanding to purchase a 25% stake in Hanon Systems from Hahn & Co., the latter's largest shareholder with a 50.5% stake.

With the deal, Seoul-based Hahn & Co. will shed half of its stake in the automotive components manufacturer; it acquired the majority 50.5% stake for 2.75 trillion won in 2015.

Under the agreement, the world’s sixth-largest tire maker will inject an additional 365.1 billion won into Hanon Systems to buy new shares.

The rights offering will increase its ownership to 50.5% in the latter, including its current shareholding of 19.5%, which it purchased in 2014 for 1.8 trillion won.

However, Hahn & Co. will not subscribe to new Hanon System shares. Its ownership thus will decline to 22% to become its second-largest shareholder, reflecting the share dilution.

After the deal closes around by the end of this year, Hankook & Company’s assets are expected to surge by 50% to about 26 trillion won, joining the ranks of South Korea’s top 30 business groups.

Hanon Systems' thermal management device

The stake purchase will help Hankook Tire expand its presence in the electric vehicle market with a diverse product portfolio.

Hanon Systems supplies battery thermal management systems, heat pump systems and cooling fan motors for combustion engine cars and EVs, competing with Japan's Denso, Germany’s Mahle and Valeo.

Its customers include Hyundai Motor Group, Ford, Volkswagen, BMW and Mercedes-Benz.

In 2023, it earned 277.3 billion won in operating profit on sales of 9.56 trillion won in sales. Its operating profit margin has been on the decline in recent years, falling to 2.9% last year from 6% in 2019.

Write to Jae-Fu Kim and Jin-Won Kim at hu@hankyung.com

Yeonhee Kim edited this article.