Halla Climate Control Corp. (018880) fell in Seoul trading after Visteon Corp. (VC:US)’s 913 billion won ($795 million) buyout offer was blocked by South Korea’s biggest institutional investor.
Halla Climate fell 3 percent to 24,100 won at the 3 p.m. close of trading on the Korea Exchange, after dropping as much as 9.1 percent earlier. This compares with the 0.3 percent rise on the benchmark Kospi index.
National Pension Service, which owns 8.1 percent of Halla, rejected Visteon’s bid after reviewing the growth potential of the Daejeon, South Korea-based maker of automotive air-control equipment, the $320 billion fund said in a statement yesterday. The offer for the 30 percent Visteon doesn’t already own needed support from investors representing 95 percent of Halla’s shares to succeed.
“There was speculation the deal won’t go through from day one,” said Shin Chung Kwan, an analyst at KB Investment & Securities Co. “The National Pension’s decision yesterday just got rid of the ‘what ifs’ and made that a reality.”
The move is a blow to Van Buren Township, Michigan-based Visteon and fueled speculation the company may sweeten its bid.
Visteon has been seeking to buy out Halla’s other shareholders and sell less profitable units to focus on its operations in Asia. The company’s shares slid 2.6 percent to $30.53 in New York yesterday, the lowest closing price since exiting bankruptcy in 2010.
Any revised offer may not happen until the end of the year amid increased labor strikes by unions ahead of South Korea’s December presidential election, said Shin at KB.
Halla’s union threatened to go on a strike if Visteon’s offer was accepted, according to a statement on the labor group’s website on July 6.
“Visteon probably learned that in order to succeed with the takeover, they will have to consider the union, the politics and how the National Pension will react to all this,” Shin said. “Next time they will select a better time and a better price.”
Visteon offered 28,500 won a share for Halla on July 4, a premium of about 14 percent to the closing price that day.
In combination with Halla, Visteon said it would become the world’s second-largest supplier of climate-control systems.
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