Reports: Doublestar/Kumho acquisition close to collapse
Doublestar’s proposed acquisition of Kumho is reportedly close to collapse after the Qingdao-Chinese tyre manufacturer asked for a double-digit discount. According to reports in the Nikkei, Kumho’s major shareholders are planning to write to Doublestar asking the firm to agree to the end of bid talks between the two parties.
Doublestar had asked for a 13 per cent discount on the basis that Kumho’s financial results were not as strong as expected and therefore there were further risks attached to the proposed purchase.
However, there is a political dimension too. Because Kumho supplies tyres to South Korean government fighter jets, the local government is reportedly reticent about giving too much access to such technology to the Chinese. By law, the trade minister has the authority to approve acquisitions of military suppliers by foreign buyers.
Now Kumho’s largest investor, the Kumho Development bank has asked conglomerate Kumho Asiana Group to submit a survival plan for Kumho Tire by 12 September.