[Reporter’s Notebook] Hankook & Company Shareholding Dispute... Is There an End in Sight?

"It seems that the brothers need to resolve their misunderstandings through conversation. There are no concrete plans yet, but we need to meet." (Cho Hyun-beom, Chairman of Hankook & Company)

"The current corporate governance is in a crisis situation. We ask for your participation in the tender offer conducted by MBK." (Statement from the brothers including Cho Hyun-sik, Advisor of Hankook & Company)

On the 21st, practically a day before the deadline for securing shares envisioned by private equity fund MBK Partners and Cho Hyun-sik, Advisor of Hankook & Company (formerly Hankook Tire), the brothers expressed their respective positions at similar times but different locations. The gap between the brothers still appeared wide.

With the largest shareholder Chairman Cho at the center, joined by their father, Honorary Chairman Cho Yang-rae, and cousin company Hyosung Group as friendly forces buying company shares, the prevailing assessment is that the winning side has effectively tilted toward Chairman Cho. As of the 20th, the shares held by Chairman Cho and special related parties, including Honorary Chairman Cho's 3.77%, total 45.87%. Additionally, Hyosung Group affiliates (Hyosung Advanced Materials), considered cousin companies of Hankook & Company, are also classified as Chairman Cho’s allies. They have purchased more shares, bringing the shareholding close to 50%.

Although Advisor Cho’s attempt to exercise management rights is likely to fail, the wounds from the ‘second brothers’ conflict’ are not expected to heal easily. The eldest daughter, Cho Hee-kyung, Chairwoman of the Hankook Tire Sharing Foundation, referred to her younger brother Chairman Cho as "someone who exploited an unhealthy father for his own selfish interests" and "an unethical manager," while the younger brother’s side did not hesitate to use harsh expressions such as "words and actions that betray familial bonds."

Even considering the dispute involving the Hyosung family who joined in securing shares of Hankook & Company, it seems difficult for the conflict to be resolved. Cho Seok-rae, the second son of Honorary Chairman Cho of Hyosung Group, was prosecuted and is currently on trial for allegedly forcing the distribution of press releases related to his resignation against his father and older brother.

The disruption of Hankook & Company’s corporate governance is unlikely to be beneficial from the perspective of our economy. The other brothers, including Advisor Cho, have clearly stated that they will continue to voice concerns citing Chairman Cho’s legal risks. Considering that the anti-Cho Hyun-beom faction’s shares exceed 30%, there is a high possibility that they will raise governance issues and try to persuade other shareholders at any time. The ‘meeting between brothers’ mentioned by Chairman Cho does not seem easy.

Choi Dae-yeol, Deputy Head of Industrial IT Department

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