This article was published on July 16, 2025, at 4:04 p.m. on the ChosunBiz MoneyMove site.
The sale schedule of HS Hyosung Advanced Materials' tire steel code division is being delayed. There were high expectations that it would be a significant player in this year's merger and acquisition (M&A) market as multiple buyers entered the bidding, but it is reported that there is a large gap between the sale side and the candidates regarding the price.
Various candidates, including domestic private equity fund (PEF) management firms and global investors, participated in the preliminary bidding, but the candidates mentioned as real buyers are reportedly offering prices that do not meet the sale side's expectations, raising the possibility of rejection.
According to investment banking (IB) industry sources on the 16th, HS Hyosung Advanced Materials and the sale's lead manager Samjong KPMG are delaying the selection of a preferred bidder for the tire steel code division. Initially, the sale side planned to select the final buyer by the end of June or the beginning of July and proceed with negotiations for the stock purchase agreement (SPA). It has been confirmed that STIC Investments and JKL Partners participated in the preliminary bidding held on the 20th of last month.
The sale side is reported to have conducted a progressive deal where all candidates selected for the shortlist competed on price in the preliminary bidding. During this process, it is said that strategic investors (SI) from China and Bain Capital dropped out, effectively turning it into a two-way contest between STIC Investments and JKL Partners. An industry official noted, “The two buyers that participated in the preliminary bidding reportedly submitted very aggressive prices to win the competition.”
However, it is reported that the amounts submitted by the two candidates were lower than the sale side's hoped-for price. The sale side had maintained a corporate value of up to 2 trillion won, but lowered its expectations to around 1.5 trillion won. However, both candidates reportedly deemed the appropriate price to be in the low 1 trillion won range. Considering that the EBITDA for the tire steel code division is 140 billion won, this translates to a valuation of 8 to 9 times the EBITDA.
An industry official explained, “The two candidates have even prepared funding plans in advance, indicating a strong acquisition intent,” adding, “However, due to the nature of the tire steel code business, there isn't much upside, so they cannot raise the prices further.” There is also speculation that the prolonged deliberation of Chairman Jo Hyun-sang of HS HYOSUNG is to induce competition among the two candidates and wait for additional proposals.
Chairman Jo's involvement in the investigation by Special Prosecutor Min Jung-ki, which probes allegations relating to Kim Keon-hee, is also seen as bad news. HS HYOSUNG is under suspicion of having invested in IMS Mobility, where a person surnamed Kim, identified as a close aide to Mrs. Kim, was an executive. Chairman Jo is scheduled to appear before the special prosecutor on the 21st. If the special prosecutor conducts a thorough investigation on Chairman Jo, the entire transaction could become uncertain.
Steel codes are a key material that reinforces the durability and shape stability of tires, and HS Hyosung Advanced Materials is the only company that produces all three main tire reinforcing materials: polyester, nylon, and steel codes. They hold the number one market share in North America and the number three share in Europe in the global tire steel code sector, recording sales of 860 billion won last year.