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South Korea's Hankook Tech chairman sells entire stake to younger son; shares rally

06/30/2020 | 03:46am

By Heekyong Yang

The parent of South Korea's top tyre maker Hankook Tire & Technology said its chairman had sold his stake in the group to his younger son, driving its shares up 30% as investors bet this could lead to a family feud over ownership.

Hankook Technology Group Co Ltd Chairman Cho Yang-rai has sold his 23.59% stake in a block deal to Cho Hyun-bum, who heads the tyre maker, making junior Cho the largest shareholder with a nearly 43% stake in the parent company, a regulatory filing showed on Tuesday.

His older brother Cho Hyun-shick, vice chairman of the parent firm, holds a 19.32% stake, while their two sisters who have a 10.82% and 0.83% stake each.

The firm did not disclose the deal value. The stake was worth 269 billion won ($225 million) as of Monday's close.

A spokesman for Hankook Tire said the brothers would continue to run the group.

The group's shares rose as much as 30% after local media reported the stake sale, fuelling expectations of a ownership tussle, while Hankook Tire, worth $2.4 billion, rose nearly 4%.

"The stock is up not because of the company's fundamentals, but because of bets on which Cho brother would win control," said Chung Moon-su, a Hyundai Motor Securities analyst.

"Founding family members could take action to fight for the group's management by aggressively buying up shares, which would also drive up the stock price."

Hankook Tire is among the world's top 10 tyre makers, whose customers include Hyundai Motor Co, Ford Motor Co and Volkswagen.

Korean Air Lines went through a family feud this year which helped boost shares of its parent even as the carrier had to ground some 90% of its operations due to the coronavirus pandemic.

The ownership change at Hankook follows a court ruling in April that ordered a suspended jail sentence for the junior Cho for embezzling and taking bribes from Hankook Tire's suppliers. The 48-year-old has appealed to a higher court.

($1 = 1,197.1500 won)

(Reporting by Heekyong Yang and Hyunjoo Jin; Additional reporting by Jihoon Lee; Editing by Miyoung Kim and Himani Sarkar)

© Reuters 2021
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