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Hahn & Company. (Photo courtesy of Hahn & Company) |
[Alpha Biz= Reporter Kim Jisun] Hankook & Company Group finalized the acquisition of Hanon Systems at the end of last year, incorporating the automotive thermal management solutions provider into its portfolio.
In 2015, Hanon Systems' shares were initially acquired by private equity firm Hahn & Company (50.5% stake) and Hankook Tire (19.49%), with Hahn & Company holding management control.
Before the acquisition, Hanon Systems maintained a stable financial standing. Its consolidated debt ratio and total borrowings in 2014 were 94% and 401.4 billion KRW, respectively. These figures remained steady in 2015, with a debt ratio of 92.2% and total borrowings of 401 billion KRW.
However, the acquisition period introduced significant financial strain. Investments included 120 billion KRW for Daejin Unitech’s automotive thermal division and 1.38 trillion KRW for Magna Group’s thermal management business (FP&C) in 2018, leading to substantial borrowing. By the end of 2018, Hanon Systems’ debt surged to 1.67 trillion KRW, over four times the level in 2014.
The debt ratio also climbed steeply, from 92.2% in 2015 to 102.8% in 2016, 203% in 2018, and 283.9% in 2022. While it slightly declined to 268.5% by the end of 2023, the interest burden for the year alone amounted to 185.7 billion KRW.
Profitability has also declined. The operating profit margin fell from 4.4% in 2021 to 3% in 2022 and 2.9% in 2023. Net profit plummeted from 310.7 billion KRW in 2021 to just 26.7 billion KRW in 2022, recovering modestly to 58.9 billion KRW in 2023.
Former major shareholder Hahn & Company sold a 23% stake to Hankook Tire, relinquishing control. Additionally, it secured a put option for up to 40% of its remaining shares (58.71 million shares) by early 2027, at a price of 5,200 KRW per share. This price is approximately 26% higher than Hanon Systems' closing price of 4,130 KRW as of 3 PM on November 21.
The acquisition places pressure on Hankook & Company to boost Hanon Systems' stock price. Given the scale of this high-profile M&A deal spearheaded by Chairman Cho Hyun-beom, the group must achieve meaningful financial improvement, stock recovery, and overall value enhancement to ensure the success of the transaction.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
