Korea Times reports that Sunsage, a joint investment firm between JP Morgan Partners and Affinity Capital, is likely to select preferred bidders this month for negotiation for the sale of Mando Corp., Mando officials said Wednesday.
Sunsage owns a 73.11 percent stake in the second largest automobile parts maker in South Korea.
Mando president Oh Sang-soo said the U.S.Â’ TRW Automotive and GermanyÂ’s Continental Teves and Siemens have shown interest in the takeover. KoreaÂ’s largest automaker, Hyundai Motor, has been rumored to be joining the race, but it remains unclear whether or not it has contacted Sunsage.
``Mando is an attractive acquisition target and of course we have an interest in the race,Â’Â’ a Hyundai Motor official said, without confirming whether or not Hyundai has decided to bid.
In June, Park Jeong-in, chairman of Hyundai Mobis, South KoreaÂ’s largest parts maker affiliated with Hyundai Motor, said he may want to purchase Mando. The chairman, however, denied a speculation that Sunsage asked it to buy the parts maker. ``Mobis has never discussed the takeover of Mando with its current owners. We just have to wait and see,Â’Â’ the 62-year-old chairman said.
Hyundai Motor officials said if the company takes over Mando, the purchase will make it possible for Hyundai to establish a more efficient parts production and distribution system, but it will be a huge financial burden.
``Sunsage plans to complete the sale as early as November,Â’Â’ a Mando official told The Korea Times. ``Hyundai Motor has not made any move for the takeover, but it can bid any time. It depends on the price and sales conditions provided by Sunsage.Â’Â’
Mando officials said Sunsage plans to sell Mando for at least $2 billion, but most experts think the price should be cut to make the sale more attractive to investors.
Sunsage acquired Mando for 600 billion won ($600 million) in 1999, when it was suffering financial difficulties following the collapse of its parent, Halla Group.
Halla Engineering and Construction chairman Chung Mong-won and the company hold a combined 18 percent stake in Mando. Their shares are not included in the sale.
Mando, which provides key auto parts to Hyundai Motor and Kia Motors, posted 1.4 trillion won in sales and 170 billion won in operating profits last year. It is not listed on the Korea Stock Exchange.
Hyundai Motor is affiliated with Hyundai Mobis and Kasco, which provide braking systems, module systems and low-end items for the company and its affiliate Kia. The high price set by Sunsage may reduce Hyundai MotorÂ’s appetite for Mando, but if the price is marked down, Hyundai will be more aggressive, according to Mando officials.
According to Automotive News, a major U.S. car magazine, Mando was the only South Korean auto parts manufacturer to rank among the worldÂ’s top 100 industry players by sales in 2004. Mando president Oh has said the company aims to be one of the top 20 global automotive suppliers by 2010 by expanding domestic and overseas businesses.
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