In what could turn out to be the largest LBO Asia has ever seen, JPMorgan Partners and The Carlyle Group are reportedly bidding on Kumho Industrial Co., Korea’s second largest tire manufacturer.
Kumho picked a group led by the two firms as its preferred negotiator over a bid led by Goldman Sachs Group and Newbridge Capital Ltd., said Kim Young Sik, a Kumho spokesman, in the Seoul Economic Daily.
JPMorgan Partners, J.P. Morgan Chase & Co.’s private-equity arm, and Carlyle, a Washington, D.C.-based firm with stated intentions to expand its investment strategy in Asia, have offered $1.2 billion for 80% of the tire maker, the paper reported. Officials at both firms declined to be interviewed for this story. Choosing a preferred negotiator doesn’t guarantee a sale anytime soon. The business has two plants in Korea, where 14 million people own cars, and one in China, Asia’s No. 2 auto market. According to Seoul Economic Daily, the sale is key to Kumho’s efforts to reduce debt, for its parent reported the second-highest debt-to-equity ratio of Korea’s top 10 business groups last March.
This is not the first time JPMorgan and Carlyle have teamed up. In September 2000, Carlyle and JPMorgan bought a controlling interest in Korea-based KorAm Bank for $450 million. And in June 2000, the two firms turned a tire valve factory in the U.S. into offices for Internet companies for an estimated $70 million.
Kumho plans to sign a non-binding sale agreement with the investor group by Feb. 15, according to a spokesman for that company.
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