AKRON (Jan. 23, 2002) – South Korea's Kumho Group expects to decide by early February on a preferred offer for majority ownership of its tire activities, but a final agreement will be subject to further talks, according to Kyu S. Cho, president of Kumho Tire U.S.A. Inc.
Kumho Group is offering up to 80 percent control of its tire business to outside investors. Earlier this month, the company accepted two bids – from consortia led by investment bankers Goldman Sachs Group Inc. and Carlyle Group, a private U.S. equity fund enterprise – and management is now evaluating them.
A memorandum of understanding is expected by early February, Mr. Cho said, followed by further talks to determine the specifics of the agreement. The company's management team is expected to be retained.
The parties involved declined to discuss the possible transaction value; Asian media valued the stake at up to $1.5 billion. Kumho reported tire sales of $1.23 billion in fiscal 2000.
Kumho Group is a diversified concern with activities in airlines, construction, petrochemicals, finance, ground transportation and tires.
Kumho had tried in 1999 to sell a 50-percent stake in the tire business to another tire maker, but talks with several parties failed because they couldn't agree on an equitable market value for the assets, executives said at that time.
Kumho is still open to discussions with other tire companies about technology cooperation, Mr. Cho said.