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Sale process for Hanon Systems making little progress It is unclear when final round of bidding will take place

Translated by Ryu Ho-joung 공개 2021-09-30 08:09:26

이 기사는 2021년 09월 30일 08:08 더벨 유료페이지에 표출된 기사입니다.

The sale process for South Korean automotive supplier Hanon Systems is making little progress, raising doubts over whether a deal, which would be one of the biggest in South Korea this year, could be sealed in the near future.

The company received preliminary offers on June 22 from several strategic and financial investors including US private equity giant Carlyle Group. Many expected the final round of bidding would take place at around the end of this month, but the timeline has apparently yet to be confirmed.

Although it depends on many factors, over the three-month period between bidding rounds is relatively long compared to other regular sales through an auction process, even after considering the effect of the Covid-19 pandemic and delays due to summer vacation and Chuseok holiday.

Potential buyers that expressed interest in the company have reportedly been conducting due diligence for the past few weeks. Hanon Systems, controlled by private equity firm Hahn & Co, has remained open to interest from other foreign strategic investors in addition to preliminary offers from bidders.

Carlyle is still in the race but is said to be taking more like a wait-and-see attitude. Some strategic investors are considering submitting final offers, but it remains to be seen how serious they are about acquiring the company, according to sources.

Hanon Systems had a market value of 8.27 trillion won ($6.99 billion) based on Wednesday’s close. The potential sale will include 50.5% and 19.49% stakes held by Hahn & Co and Hankook Tire & Technology, respectively. With a premium to the market price, a combined 69.9% interest in the company is estimated to be worth as much as 8 trillion won.

Many expected the bidding war to be dominated by large foreign strategic and financial investors given the size of the deal. Hanon Systems’ financial performance has been strong in recent years and its order book is supported by rising demand for electric vehicles. These factors could raise the company’s attractiveness to potential buyers and increase the negotiating power of the seller.

However, some are casting doubts over the certainty of the deal as the sale proceeds at a very slow pace even after the company’s financial performance in the first half of 2021 is believed to have been disclosed to potential buyers.

“The sale initially attracted strong interest, but now potential buyers seem to be less enthusiastic,” an industry insider said. “Selling the company by private negotiations rather than a private auction could have been a better choice for a speedy deal.” (Reporting by Hee-yeon Han)
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