SEOUL, South Korea — Qingdao Doublestar Tyre Co. Ltd.'s pending deal to buy a 42-percent share of Kumho Tire Co. Inc. reportedly has hit a new snag.
Korean media are reporting that Qingdao Doublestar is seeking a cut in the price it agreed earlier this year to pay a creditors' group led by Korean Development Bank for the stake in Kumho Tire.
Doublestar inked an agreement in March to buy a controlling stake in Kumho for $830 million, which the parties at that time said was a 75-percent premium over Kumho's market value based on its share price. According to the Korean news agency Yonhap, Doublestar is now demanding the price tag be reduced roughly 16 percent, to less than $700 million.
Doublestar's revised demand appears tied to Kumho Tire's less-than-stellar financial performance and falling share price this year so far. The Chinese company has the right to call off the deal if Kumho Tire's operating profit falls more than 15 percent by the Sept. 23 deadline for the deal to be sealed, according to Pulse News.
Throughout the summer, it's also been reported widely that Doublestar and Kumho Asiana Group — majority owner of Kumho Tire— had disagreements over the value of rights to the Kumho trademark.
Korean news agency Pulse News said that with the new demand, Kumho Asiana Group Group Park Sam-koo — who in the past had a personal ownership stake in Kumho Tire — would be given a new chance to rebid for the tire business.