Hahn & Co kicks off sale of Hanon Systems Information memorandum sent to a handful of potential buyers of automotive supplier
Translated by Ryu Ho-joung 공개 2021-05-24 08:11:28
이 기사는 2021년 05월 24일 08:02 thebell 에 표출된 기사입니다.
Seoul-based Hahn & Company has started a sale process for a controlling stake in global automotive supplier Hanon Systems, which is expected to fetch as much as 8 trillion won ($7.1 billion).Hahn & Co and Morgan Stanley, which is managing the sale process, have sent an information memorandum to about 10 potential buyers, industry sources said. The private equity firm is expected to receive indicative bids in mid or late June.
The sale will include a 69.9% stake in Hanon Sysetms, 50.5% and 19.49% held by Hahn & Co and Hankook Tire & Technology respectively. Hankook Tire & Technology, which has both a right of first refusal and tag-along right, decided to exercise its tag long right to exit its position in the company.
Only a select group of firms with sufficient financial strength to do a large deal have been invited to submit offers, with the company’s value estimated to be as much as 8 trillion won.
Among domestic conglomerates invited by the seller are LG, SK and Halla, while German auto parts maker Continental AG is understood to have received the information memorandum among foreign strategic investors.
Global private equity firms including KKR, TPG, Bain Capital and Carlyle Group are also said to be weighing up whether to participate in the bidding for Hanon Systems. Given the expected size of the deal, private equity investors may want to team up with a strategic investor, industry watchers said.
LG could be a good fit as a potential suitor of Hanon Systems, which holds the second largest share in the global market for vehicle thermal management, considering the conglomerate’s auto electrification ambitions, industry watchers said.
LG Electronics announced late last year a joint venture with Canadian auto parts manufacturer Magna International to develop electric powertrain product offerings. LG Energy Solution, spun out of LG Chem in December, is also ramping up efforts to expand its electric vehicle battery business. Sources said several private equity firms interested in Hanon Systems are sounding out LG Electronics about a possible partnership.
SK is also considered one of the strong candidates to buy Hanon Systems. The conglomerate has expanded its investment in EV battery technology and materials with an ambition of virtual integration. SK Innovation and Ford Motor also plan to launch a battery joint venture in the US to make battery cells for use in rechargeable EV batteries.
Halla, a previous owner of Hanon Systems, is said to have a desire to regain the company. Halla established Halla Climate Control (HCC) in partnership with Ford Motor in 1986, but offloaded its stake to Visteon Corp as part of the restructuring in 1999. In 2013, Visteon integrated its climate business with HCC to form Halla Visteon Climate Control, which was acquired by Hahn & Co in 2015 and changed its name to Hanon Systems.
Hanon Systems recorded revenue of 1.87 trillion won in the first three months of 2021, up 12% year-on-year. Its operating income of 94 billion won was up 60% on last year’s first quarter. But the results were slightly below market expectations, probably due in large part to the global chip shortage which disrupted production of major automakers. (Reporting by Si-eun Park)
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