China's Doublestar vowed to become a global player after it signed a deal Monday to acquire a controlling stake in South Korea's second-largest tire maker Kumho Tire. It was this year's first major Chinese investment in South Korea which has been locked in a diplomatic row over the deployment of a US missile shield.
Doublestar said it signed a share purchase agreement with creditors of Kumho Tire to secure a 42.01 percent stake for 955 billion won ((838 million US dollars).
With its dominant influence in China, Doublestar said it can help Kumho Tire to improve its financial and operational hardships, and ultimately to achieve higher growth. Doublestar and Kumho Tire could create "the best synergies in branding, sales, procurement and other areas", it said.
"Doublestar and Kumho Tire will soon become a global brand, exercising a high degree of influence in the global tire industry, powered by the companies' complementary and strategic cooperation," the Chinese company said.
Kumho Tire with plants in China, Vietnam, and the United States was put under a debt workout program in December 2009 due to a severe liquidity crunch. It graduated from the program in late 2014.
Kumho Asiana Group Chairman Park Sam-koo has the preemptive right to buy back Kumho Tire as an individual, but there have been doubts among market watchers about his ability to finance the deal. Asiana Airlines is the group's flagship subsidiary.
Park hopes to take back Kumho Tire founded by his father as part of efforts to rebuild his tattered empire. Creditors stressed the takeover should not be made through a consortium. On Monday, Park's group said it should be allowed to set up a consortium to buy back Kumho Tire. Otherwise, it vowed not to exercise the right.
Doublestar said Kumho Tire holds strength in passenger car radial (PCR), especially for its excellent quality in SUV and racing-purpose products.
While China accounts for 40 percent of Kumho Tire's tire manufacturing capacity, its performance in the market has been stagnant since 2011 when there was a mismatch between production capacity and demands.
Lim Chang-won = email@example.com