Visteon plans to take full control of Halla, buy remaining stake

Article by Christian Andrei, on July 5, 2012

To take full control of Halla Climate Control Corp., Visteon Corp. will be making an offer of about $800 million. However, there may be obstacles. Analysts say that a key shareholder could be holding out for more. Halla is an air conditioner maker based in South Korea while Visteon is a U.S. auto parts supplier. Over 60% of Halla’s revenue is from Hyundai Motor Group.

Halla would be a valuable asset to Visteon because of its prowess in high-end air conditioning and heating systems, especially since electric cars tend to need more sophisticated climate control mechanisms. Visteon said that it will make a bid for the 30 percent of the company that it doesn’t own yet. It will offer 28,500 won for each share, a 14 percent premium to Halla’s last closing price.

The offer will begin last Thursday and will continue until July 24. In morning trade, Halla Climate's stock surged by 13 percent to a record high of 28,200 won. It was seen to be last trading at 28,100.

Shin Chung-kwan, an analyst at KB Investment & Securities, said that it’s not likely for South Korea's National Pension Service, which owns 9.8 percent of Halla Climate, to be pleased with the existing offer. In a report, he said that the NPS will play a crucial role in deciding if Visteon’s offer would win.

He said that the NPS has a “decisive role” in determining if Visteon would succeed with this offer. A pension fund spokesman said that so far, no decision has been made. According to other analysts, Visteon may feel the pressure to add to its bid.

Park Sang-won, automobile sector analyst at Eugene Investment & Securities, said that Visteon’s offer represents a high premium. But with the anticipation of Halla’s entry to the segment, its price may go even higher. Visteon gained majority ownership of the South Korean company from Ford in 1999, said it aimed to acquire at least 95 percent of Halla Climate and then have it delisted from the South Korean stock exchange. [source: Reuters]

Topics: visteon

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