Last week's announcement by Groupe Michelin that it will increase its stake in Hankook Tire Co. to more than 6% via the acquisition of two million shares is the latest step in Michelin's plan to eventually own 10% of the South Korean tiremaker.
Michelin and Hankook signed an agreement in January 2003 that made Michelin a shareholder in Hankook, set Michelin's acquisition goal of Hankook stock (10%), and explained the role that Michelin will play in Hankook's growth.
The companies said they would co-operate in the research and development, manufacturing and distribution of their respective products in certain markets, including the licensing of Michelin's PAX run-flat system technology to Hankook.
At the time, Jean-Marc Francois, president of Michelin Asia-Pacific, said the partnership was another step in his company's development plans for Asia.
Officials from Michelin and Hankook said the companies "share many perspectives which we believe constitute a strong foundation for our partnership. This will allow us to explore opportunities and jointly develop our co-operation in the spirit of mutual respect, understanding and benefit."
The two million shares that Michelin intends to buy were made available on March 17 and represent 1.3% of Hankook's stock. Michelin will pay $26 million for them.
Michelin is the top tire manufacturer in world tire sales with an estimated $17.6 billion in 2005, according to Modern Tire Dealer's 2006 Facts Issue. Hankook is ranked 9th in the world with $2.2 billion in 2005 sales.
