Hahn & Co. seeks tender offer for SsangYong C&E

[Courtesy of Hahn & Co.]

South Korean private equity firm Hahn & Co. is seeking a tender offer for the remaining shares of SsangYong C&E Co., the country’s leading cement maker.

According to sources from the investment banking (IB) industry on Sunday, Hahn & Co. Cement Holdings Co., a special purpose company of Hahn & Co., and SsangYong C&E will launch a tender offer for the cement maker’s 100,254,756 shares at 7,000 won ($5.23) per share.

The shares account for about 20.1 percent of the outstanding shares, amounting to 701.8 billion won. The tender offer will be held from February 5 to March 6 and led by NH Investment & Securities Co.

Hahn & Co. acquired a 46.14 percent stake in SsangYong C&E for 883.7 billion won through its No. 1 blind fund in 2016.

The PEF invested an additional 100 billion won through a rights offering to shareholders and acquired the stake (32.36 percent) of the then-second largest shareholder, Japan’s Taiheiyo Cement Corp, for 454.8 billion won.

Through these investments totaling 1.44 trillion won, Hahn & Co. secured a 77.68 percent stake in the cement maker.

Hahn & Co., currently the largest shareholder, is expected to acquire all remaining shares of SsangYong C&E through a tender offer and then proceed with its delisting.

After becoming the largest shareholder of the cement maker, Hahn & Co. shifted its strategy to long-term holding and reacquired it in July 2022 through a continuation fund, a new fund that reinvests in previously held assets, of about $1.5 billion.

It also recapitalized its Ssangyong C&E management rights investment fund in 2023.

Ssangyong C&E, meanwhile, posted record annual sales of 1.97 trillion won in 2022 after being acquired by Hahn & Co.

Boosted by cement price increases, the cement maker posted sales of 1.04 trillion won in the first half of 2023, up by 184.5 billion won from the same period a year earlier. But its operating profit fell by about 4.9 billion won year-on-year to 47.5 billion won due to a rise in electricity rates.

Ssangyong C&E also secured a large amount of cash by disposing of subsidiary stocks and real estate in 2023. It sold a 77 percent stake in SsangYong Remicon Co. and its existing real estate to Jangwon Remicon Corp. for about 380 billion won.

It also conducted a buyback of its own shares worth about 8 billion won for the first time since its inception to enhance shareholder value.

This is not the first time Hahn & Co. has made a tender offer to acquire the entire stake of an acquired company and then proceed with its delisting.

Previously, Hahn & Co. acquired a controlling stake in medical device maker Lutronic Corp. from its founder and Chairman Hwang Hae-lyung and then conducted two tender offers to secure 100 percent of the company.

The PEF then delisted Lutronic from the Kosdaq market In October 2023 and recovered 145 billion won through a paid-in capital reduction.

“Additional tender offers and delisting of acquired companies have the advantage of protecting the rights of minority shareholders and creating a favorable structure for resale by converting to a private company,” an IB industry insider said. “The attempts of PEFs to conduct tender offers and delisting of acquired companies are expected to increase in Korea.”