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SK Group denies acquisition of Kumho Tire

Posted December. 16, 2017 08:32,   

Updated December. 16, 2017 09:35


SK Group has officially denied a news report that it is in talks to acquire the debt-laden Kumho Tire, apparently due to a meagre synergy effect expected of the acquisition and the hardline labor union of the country’s second-largest tire maker.

“We are not considering acquiring Kumho Tire,” SK said in a disclosure on Friday, repudiating reports and speculation that the company discussed the acquisition of Kumho Tire’s shares with its creditor Korea Development Bank. “It is not us, but Kumho Tire’s creditor that first reached out to us to my knowledge,” an official from SK clarified, contradicting earlier reports that SK first suggested a potential acquisition to Korea Development Bank.

Though SK flatly denied those rumors, Korea’s third-largest conglomerate is understood to have gone through internal review. “Out of all conglomerates in Korea, only SK Group is capable of or can afford the acquisition of the tire maker,” said an industry source. Samsung Group, Korea’s No. 1 conglomerate, does not have any business areas associated with tire production while other large companies including Hyundai Motor, LG and POSCO are financially tightened or simply do not have any reasons to acquire Kumho Tire at the cost of around 1 trillion won. In these circumstances, it is only SK Group that may have the slightest motive to acquire since it has petrochemical subsidiary SK Innovation.

According to the creditor of Kumho Tire, there is no company currently under discussion for the acquisition. If no company announces its intention to purchase the tire maker by the time of the release of a final due diligence report next week, Kumho Tire should carry out restructuring. “For now, it seems highly likely that the company should restructure itself,” said an official from the creditor.

Eun-Taek Lee nabi@donga.com · Choong-Hyun Song balgun@donga.com