Kumho seeks to repurchase bus company
Around two years ago, Kumho Tire’s parent company the Kumho Asiana Group was heavily indebted, and sold its Kumho Buslines bus operation to a private equity company. Now the Korean conglomerate intends to repurchase the business, however concerns exist that the purchase price may end up being too high.
According to the Korea JoongAng Daily, on 3 August Kumho Asiana said it will enter the acquisition process for the express bus operator once the sales lock-up period ends on 9 August. The private equity consortium KoFC IBKS KStone PEF, which is jointly run by IBK Securities and KStone Partners, has already picked Bank of America Merrill Lynch as the managing firm for the sales process and has selected Anjin Accounting as an advisor. Kumho Terminal, which is entirely owned by Kumho Asiana subsidiary Asiana Airlines, acquired a 30 per cent stake in the equity fund last year and received priority purchasing rights.
The Korea JoongAng Daily wrote on 4 August that the reason Kumho Asiana honorary chairman Park Sam-koo wants to reacquire Kumho Buslines is that the company is viewed as symbolic for the transport conglomerate. The operation, originally named Gwangju Passenger Service, was the founding company that Park’s father and group founder Park In-chon developed into the modern Kumho conglomerate.
“Kumho Asiana Group started from Kumho Buslines, which represents the South Jeolla region, and if it is sold to another group, the people in Gwangju and South Jeolla will not like it much,” Korea JoongAng Daily quoted a group spokesman as saying. Kumho Asiana added that if another company acquires the bus operator, it will not allow the buyer to use the Kumho brand name.
Although its commitment to repurchasing Kumho Buslines is strong, Kumho Asiana also voiced concern that the price is becoming too inflated. According to local media reports, the cost of Kumho Buslines could rise to 600 billion won (£343 million), which is more than double its evaluated 2012 value. Kumho Asiana says it has funds earmarked for the acquisition but “wants to see a lower price tag.“