Kumho Tire Begins Succession Process, Could It Become the Second Hanjin Kal?

[Asia Economy Reporter Song Hwajeong] As the succession process of the Hankook Tire Group begins, there are forecasts that it might become a second Hanjin KAL. This is because, like Hanjin KAL, which experienced a management rights dispute during the succession to third-generation management, Hankook Tire may also face the possibility of a management rights dispute among brothers and sisters.

As of 9:10 AM on the 30th, the stock price of Hankook Technology Group, the holding company of Hankook Tire Group, traded at 13,600 KRW, up 11.02% (1,350 KRW) compared to the previous day. Following a 9.87% rise the day before, this marks a sharp increase for two consecutive days. Hankook Tire & Technology also showed a rise of over 8%.

The sudden surge in stock prices of Hankook Technology Group and Hankook Tire & Technology, which had shown sluggish stock performance due to poor business conditions earlier this year, is interpreted as an effect of the recently executed succession process. Cho Yang-rae, chairman of Hankook Technology Group, recently sold all of his 23.59% stake in Hankook Technology Group to his second son, Cho Hyun-beom, president of Hankook Technology Group, through a block deal (off-hours large volume trade). As a result, Cho’s stake increased from 19.31% to 42.9%, making him the largest shareholder. The difference in shareholding between the eldest son, Cho Hyun-sik, vice chairman of Hankook Technology Group, and the second son, Cho, was originally only 0.01 percentage points, but this share sale widened the gap to 23.58 percentage points.

Industry insiders are anticipating the possibility of a management rights dispute. This is because the eldest son, Vice Chairman Cho, might ally with his sister to contest management rights. Combining Vice Chairman Cho’s 19.32% stake with the 10.82% stake held by Cho Heewon, the chairman’s second daughter, results in 30.14%. Adding the 7.74% stake held by the National Pension Service, which could play a 'casting vote' role, brings the total to 37.88%. Including minority shareholders, it is not impossible to secure a majority stake.

The market forecasts that if a management rights dispute occurs, it could become a second Hanjin KAL. Previously, after the late Cho Yang-ho, chairman of Hanjin Group, passed away in April last year, his eldest son, Cho Won-tae, succeeded the management rights. However, his sister, former vice president Cho Hyun-ah, allied with private equity fund KCGI and Bando Construction to demand Cho’s resignation, intensifying the management rights dispute. In the regular shareholders’ meeting last March, Cho Won-tae succeeded in renewing his term as an inside director, winning the dispute, but the three-party alliance is still increasing its shares, so the conflict has not subsided. During the management rights dispute, the stock price of Hanjin KAL, the holding company of Hanjin Group, surged. The stock price, which was 30,000 KRW at the end of June last year, more than doubled by the end of February this year to nearly 70,000 KRW, and on April 20, it reached an intraday high of 111,000 KRW, marking the highest price since its launch in August 2013.

If a management rights dispute among siblings becomes a reality at Hankook Tire, securing shares will be inevitable, which is expected to lead to a rise in stock prices. A securities industry official said, "Typically, when a management rights dispute occurs, the parties involved compete to secure shares, which is often regarded as a positive factor for stock price increases."

This content was produced with the assistance of AI translation services.