Qingdao Doublestar confirms Kumho acquisition details

Following the news that it will take control of Kumho as the largest shareholder, Qingdao Doublestar has released details of how it is working to indirectly hold 45 per cent of Kumho’s shares by issuing shares and paying cash in order to obtain strategic assets. After the complex transaction is completed, Qingdao Doublestar will control Kumho. Prior to this transaction, 45 per cent of Kumho was controlled by the wider Doublestar group rather than the tyre manufacturer Qingdao Doublestar itself.

Although Qingdao Doublestar stated that the acquisition is being carried out by issuing shares and paying cash, the tyre maker’s cash comes from stock issuances. Qingdao Doublestar plans to issue shares to no more than 35 specific investors and raise no more than 800 million yuan in cash. Doublestar Group, the parent company of Qingdao Doublestar, is also among the 35 investors. Moreover, the subscription amount of Doublestar Group shall not be less than 50 million yuan and shall not exceed 200 million yuan.

After completing the reorganisation, Qingdao Doublestar became nominally the controlling shareholder of Kumho. However, during its acquisition process, a large amount of funds came from its parent company, Doublestar Group. Before the acquisition, Doublestar Group controlled part of the equity of Xingtou Fund and Xingwei International. In other words, Doublestar Group transferred cash and equity of Xingtou Fund and Xingwei International to Qingdao Doublestar and obtained more equity from Qingdao Doublestar.

After Qingdao Doublestar becomes Kumho’s controlling shareholder, it will be committed to solving the problem of horizontal competition between the two tyre companies