Linglong Tire wants Kumho Tire

The bidding war to acquire Korea's Kumho Tire has boiled down to a five-way competition among strategic investors from Korea and overseas including China's Linglong Tire and India's Apollo Tyres. Other bidders such as Continental AG of Germany and private equity firms like KKR & Co. were dropped out of the race.

According to investment banking industry sources on November 16, the creditors of Kumho Tire including Korea Development Bank notified to five shortlisted bidders including Linglong Tire, Apollo Tyres, and Shanghai Aerospace Industries. In addition, a domestic strategic investor was also selected in the finalist list.

Continental AG, one of the world's top-four tire makers along with Michelin, Bridgestone, and Goodyear, was defeated in the race unexpectedly. An official with the creditors explained, "Continental made an offer we can't possibly accept and that's why it was excluded from the finalists."

In the preliminary bidding held on November 9, a total of ten bidders took part in. The creditors excluded all financial investors that had not formed a consortium. An investment banker said, "The creditors were worried that financial investors that took part in the preliminary bidding may join hands with Kumho Asiana Group chairman Park Sam-koo who has the right of first refusal."

Accordingly, the bidding will be a fight among strategic investors in Korea and elsewhere. The creditors will give two months' time for due diligence to five finalists. They will selected the preferred bidder after taking the main bidding in January next year.