If the second attempt is successful, Apollo will be able to gain a strong presence in the U.S. and Europe and enter the top seven markets in the world.

MUMBAI: Apollo Corp has re-entered the takeover race after its sale of South Korea’s Kumho Tire Industries to a Chinese buyer collapsed due to tensions on the Korean Peninsula affecting the value of the deal, several people familiar with the matter said.

p In January, Chinese tire group Qingdao Double Star signed a definitive agreement with Kumho’s creditors to acquire a 42% stake in Kumho, but the deal failed due to opposition from the South Korean government.

China’s support for North Korea made authorities nervous, and Kumho Tire’s military and defense applications made the situation worse, the source said. “The previous deal was valued at $830 million and Apollo’s previous bid was around $775 million, but since China is no longer a competitor, the value of the latest deal could be in the range of $75-800 million per person.”

If the second attempt is successful, Apollo will be able to take its place in the U.S. and Europe and enter the world’s top seven markets. In an emailed statement, an Apollo spokesperson said, “The company reiterates that it has no intention of purchasing Kumho tires.”

The deal with Twinstar is believed to have been canceled due to poor performance, and the Chinese company is trying to reduce the purchase price by 16%.

But more importantly, South Korean officials are opposed to the deal. This is because of the strategic nature of the Kumho business.

One official said, “Kumho supplies tires for fighter jets and military vehicles, and tensions with China, North Korea’s traditional ally, were the catalyst for the deal’s failure.”

Blood

The creditors that bought Kumho seven years ago include Woori Bank, which holds a 14.2 percent stake, Korea Development Bank (13.5 percent) and KB National Bank (4.2 percent). They began selling their 42% stake in the company last year. The matter is being handled by Credit Suisse.

A source said, “They are restarting the process. Apollo is one of the last four competitors and is very serious about the business.

The move comes after Apollo invested $2.51 billion to buy US-based Cooper Tire three years ago, which ended in failure. ET first reported Apollo’s interest in Kumho in 201611.

Kumho would give Apollo a leading position in the sector after it abandoned its acquisition of Cooper due to integration issues. Asian tire market. Since 1975 19755. Since entering the US in 2000, Kumho has gained a foothold in the local replacement equipment (RE) market.

Kumho had sales of $2.3 billion and a net profit of $100 million in fiscal 2015. It has $50 million. Notable employees operate three factories in South Korea and export to Europe and the United States. The company is the 12th largest tire manufacturer in the world.

Analysts predict that consolidation will help streamline operations as the global tire industry struggles. “Price discipline in the tire industry has been lower than in the recent past.

In its India business, while rubber prices rose about 25% from January to June 2017 compared to the same period last year, Apollo could only reflect about 6% price increase, Credit Suisse said in an August 7 report. But ideally, we need a rate hike of 13-14%.