Hankook diversifies into temperature controls

Hankook Tire and an investment partner will pay about $3.6 billion for a majority stake in Visteon’s Korean unit, extending the tire maker’s reach into temperature controls for cars.

Hankook will spend 1.082 trillion won ($982 million) for a 19.49 percent stake, and Hahn & Co. will pay for the rest of Visteon’s 70 percent interest in Halla Visteon Climate Control, according to separate statements from Visteon and Hankook Tire.

The acquisition will help diversify Hankook’s business and strengthen its competitiveness, the company said in its filing on Thursday. The agreement also gives Korea’s largest tire maker the right of first refusal should Hahn decide to sell its stake, helping offset concern about Halla Climate’s future after it was bought by an investment firm, said Koh Tae-bong, an analyst at HI Investment & Securities.

“Hankook will now have two major engines to power its business, tire and automotive air-control parts, creating considerable synergy for the company,” Koh said. Hankook’s participation also reduces the likelihood of Halla Climate being sold to “hostile entities” in future, he said.

The transaction represents an enterprise value for Halla Climate of about 10.1 times earnings before interest, taxes, depreciation and amortization for the 12 months ended Sept. 30, according to Visteon. The deal is subject to regulatory and shareholder approvals.

Bloomberg