MBK "Won't Buy a Single Share if Korea & Company Tender Offer Falls Short"... Attention on Cho Hyun-beom's Friendly Stake

"Secondary Tender Offer Unlikely if Minimum Target Not Met"
Market Warns "Chasing Buys Is Risky"
Room Left to Raise Purchase Price Until Final Day of Tender Offer

MBK Partners, which is conducting a tender offer for Hankook & Company, stated, "If the minimum target number is not met, we will not purchase a single share," and firmly declared, "There will be no second attempt at the tender offer." This clearly indicates that the tender offer is conditional and that there are no plans for a second tender offer if the first attempt fails. However, there remains the possibility of raising the purchase price until the last day of the tender offer.

Hankook & Company’s stock price closed at 20,750 won on the 6th, down 1,000 won (4.58%) from the previous day. This was a contrast to the previous day, the 5th, when the stock hit the upper limit following the announcement of the tender offer plan.

MBK Partners announced that, together with Cho Hyun-sik, advisor of Hankook & Company and eldest son of Honorary Chairman Cho Yang-rae, it will conduct a tender offer for 20.35% to 27.32% of Hankook & Company’s shares until the 24th. On the day of the tender offer announcement, the stock price surged to the price limit and closed at 21,850 won, surpassing the tender offer target price of 20,000 won.

The likelihood of success for the tender offer is currently uncertain. Since the stock price is above the tender offer price, responding to the tender offer could actually result in a loss. MBK may raise the price until the last day of the tender offer in accordance with relevant laws. Tender offerors can submit amended applications and change the tender offer conditions until the end of the tender offer period.

If the tender offer fails, the stock price, which has already exceeded the 20,000 won level, could plunge again, requiring investors to exercise caution. There is a possibility that the stock price could plummet as the management rights dispute ends abruptly. This is why experts advise that chasing the stock amid this management rights dispute is risky.

Meanwhile, whether Chairman Cho Hyun-bum secures friendly shares is expected to be the biggest variable in this management rights dispute. However, the recent heavy sanctions by financial authorities against Kakao for alleged market manipulation in its counterattack to block HYBE’s tender offer for SM Entertainment could pose a burden for Chairman Cho’s side.

In the investment banking industry, there are criticisms regarding Chairman Cho’s side’s statement that there would be no problem defending management rights if they hold both their own and friendly shares. An IB industry official said, "If it is true that there are friendly shares, it means that whoever the parties are, they have agreed not to sell in the market to Cho Hyun-bum’s side." He added, "From the perspective of general investors and minority shareholders, this is significant information about the company’s management rights and requires disclosure." He further stated, "If the friendly shares do not actually exist, then it is a bluff to lower the success rate of the tender offer, which affects the stock price and is also problematic."

The financial authorities have decided to investigate whether there was any front-running during the tender offer process for Hankook & Company’s shares. There are suspicions that front-running occurred using undisclosed information, as Hankook & Company’s stock price rose 30.1% from 12,840 won on the 20th of last month to 16,820 won on the 4th, the day before the tender offer announcement. The trading volume increased alongside the rising price, suggesting that information about the tender offer price may have leaked before the public announcement. Hankook & Company’s trading volume, which was below 100,000 shares on November 23, surged to around 200,000 shares between the 27th and 29th, 450,000 shares on the 30th, and over 500,000 shares on the 1st and 4th of this month. During the same period, the stock price of Hankook & Company’s major subsidiary, Hankook Tire & Technology, rose slightly by 4.8%, from 43,450 won to 45,550 won, showing little volatility.

Some speculate that hy (formerly Korea Yakult), an existing shareholder of Hankook & Company, may have purchased shares as friendly shares for Chairman Cho’s side to lower the success rate of the tender offer. It is known that hy bought some shares during the day on the previous day in the form of other corporations. Analysts also noted that this behavior is similar to the purchase of other corporate shares during HYBE’s tender offer for SM Entertainment in February.

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