Jinhu trade union voted to approve the largest overseas merger and acquisition of China's tire industry, which has reached the closing stage
this is not an April Fool's joke
on April 1, South Korea's Jinhu tire union voted to agree that China Shuangxing tire would purchase 45% of its shares at a price of about 640billion won (about US $600million), thereby becoming its largest shareholder. If successfully completed, this will be the largest overseas merger and acquisition of China's tire industry so far
miraculously, in September last year, researchers from Jinhu Tire Co., Ltd. placed a 4 mg round cake like 3-dimensional graphene material in a vacuum tube and agreed to the offer of about 800 billion won (about 800 million US dollars) given by Shuangxing, which led to the collapse of the merger and acquisition negotiations. In the past six months alone, why has Jinhu tire changed its attitude? It not only chose to renew its "leading edge" with Shuangxing, but also sold its equity at a lower price than before
let's start from the beginning
♦ The financial situation continued to deteriorate, and the attitude of creditors changed first
in September 2016, due to the successive years of losses of Jinhu tire, its main creditor, Korea Development Bank (KDB), decided to sell its shares in Jinhu tire, which immediately attracted the attention of Shanghai Aerospace Industry Corporation, Qingdao Shuangxing, Jiangsu Jinpu group, Linglong tire, Apollo and other enterprises in India
in March 2017, Qingdao Shuangxing signed a contract with Jinhu tire creditor group to acquire 42.01% of its shares with about 950billion won, thus becoming its largest shareholder. Since then, in September of that year, Shuangxing company believed that Jinhu's earnings had deteriorated and requested to reduce the purchase price by 16% to 800billion won, but this request was rejected by Jinhu tire creditors, leading to the termination of the merger and acquisition negotiations
the fracture surface is about 45 ° to the axis of the specimen However, in 2017, the net loss of Jinhu tire increased to 88.56 billion won from 37.9 billion won in the previous year. By 2018, Jinhu tire was getting closer to its "deadline" to repay its debt, and its total domestic debt had reached 2.4 trillion won. In addition, its continuous operation value is only 460billion won, far lower than the company's liquidation value of 1trillion won
therefore, on March 2, 2018, KDB announced that it would return to the negotiation table with Shuangxing, and said that Jinhu would issue new shares worth about 640billion won to Shuangxing. If an agreement was reached, Shuangxing would become the largest shareholder of Jinhu, holding 45% of the shares, while the total number of shares held by the creditor group led by KDB would be reduced from 42% to 23%. At that time, the creditor said in the statement, "in order to quickly recover Jinhu tire and minimize losses, Shuangxing company is the best choice", "we decided to start investment negotiations, and the vision and action plan of Shuangxing tire are sufficiently specific and feasible". At the same time, the creditors asked the Jinhu tire union to state its position on the share sale plan before March 31
♦ Jinhu trade union is full of worries, and the chairman of Shuangxing is eager to state his position
for a long time, Jinhu tire trade union has been strongly opposed to the actions of creditors, and the focus of opposition is that this transaction may become a replica of the failed case of SAIC China's acquisition of South Korea's Ssangyong automobile in 2004. In addition, Jinhu tire trade union is worried about large-scale layoffs and technology theft after being acquired, and it cannot obtain enough funds to rebuild its competitiveness, which will have a negative impact on the local economy
in this regard, on March 22, 2018, Chai Yongsen, chairman of Shuangxing group, and Li Dongjie, chairman of KDB, held a media meeting with 180 participants at KDB headquarters in Seoul, expressing their views and opinions on issues of concern to trade unions and all sectors of society
on the one hand, Shuangxing promised to invest in Jinhu tire and provide job security for the existing 5000 employees within three years after the acquisition. At the same time, it promised to continue to serve as the main shareholder of the company in the next five years, or until the creditor sold the remaining shares of Jinhu. Chaiyongsen, chairman of Shuangxing, said, "Shuangxing hopes to become one of the top ten tire manufacturers in the world by cooperating with Jinhu tire rather than stealing technology. Just like Chinese automaker Geely acquiring Volvo car brand, we will ensure the independent management of Jinhu tire."
on the other hand, KDB chairman Li Dongjie also promised that as the second largest shareholder creditor who still owns 23.1% equity of Jinhu tire, KDB will carefully supervise every part of the business activities of Shuangxing to ensure that Shuangxing will not close the factory of Jinhu tire. He said, "Shuangxing made it clear that it would manage the company through the certification of external directors to ensure the independent management of Jinhu; at the same time, we also put forward the conditions to curb dividends and technology transfer. Both sides hope to make Jinhu develop better, so we should no longer argue about foreign and domestic acquisitions."
as for the expression of "three years" in the agreement, Chai Yongsen, chairman of Shuangxing, explained: "the three-year work guarantee only follows the expression recommended in the international M & a transaction, which does not necessarily mean that there will be a large-scale closure of factories or layoffs in three years." He also added, "the union of Jinhu tire has played a huge role in the company's achievements today. We will respect all agreements now and in the future. We will regard the union, shareholders, management, cooperative companies and customers of Jinhu tire as a common destiny, and standardize the company as soon as possible after the acquisition."
however, Jinhu tire trade union did not appreciate the attitude of Shuangxing and creditors, and the trade union demanded a 10-year work guarantee. It said in the draft: "the acquisition of Shuangxing means that it will become a new major shareholder. If Shuangxing implements management policies such as reducing the scale or closing the factory, the employment of workers will not be guaranteed. Therefore, we need Shuangxing to provide employment and management plans for the next ten years."
♦ At the last moment, it finally passed double star or became China's tire industry no.1
seeing that Jinhu tire trade union has always insisted on its own views, the M & a transaction seems to be "stuck". But their beautiful ideals can't resist the cruel reality. On March 31, a 1.3 trillion won debt of Jinhu tire will expire. Creditors warned Jinhu tire union that if it failed to repay on time, Jinhu would be subject to bankruptcy liquidation. Then, a sudden turning point appeared at the last moment. On the morning of April 1, after two hours of voting at the general meeting, 91.8% of the trade union members (2741 workers) participated in the vote, of which 60.6% voted in favour - the merger and acquisition transaction was approved by the trade union
the union of Jinhu tire, together with the creditors, approved China's Shuangxing to become its new boss at the last moment. "We have reached a consensus to accept the capital injection of Shuangxing." Jinhu tire trade union subsequently issued a statement. It is understood that the trade union will sign a normalization operation and collective bargaining agreement within this week, formally agreeing with the acquisition and investment plan of Shuangxing, which is manifested by the careless fluctuation of the force value of electronic universal material testing machine
it is worth noting that although the trade union voted more than half, the deal was opposed by no less than 35% of the trade union members, that is, nearly 1100 workers voted against it. This means that a large number of Jinhu tire workers still do not trust Shuangxing. In addition, it is said that many workers voted in favor just because they simply did not want the company to enter the state of bankruptcy and takeover
"there are still some vague parts in Shuangxing's business stability plan, and we need a clearer long-term investment plan and clearer Jinhu tire growth measures." A leader of Jinhu trade union said
"for the union of Jinhu, there is no choice but to believe in Shuangxing," said a South Korean auto industry official. "Whether Shuangxing's acquisition of Jinhu tire will eventually be the same as SAIC's acquisition of Ssangyong remains to be seen."
regardless of the current mood of all parties, as a result, the Jinhu tire acquisition case, which lasted nearly two years, has finally entered the "closing" stage. You know, Jinhu tire is the second largest tire manufacturer in South Korea, and its sales volume ranks 14th in the world. Shuangxing is the 11th largest tire manufacturer in China and the 23rd largest tire manufacturer in the world. Next, when Shuangxing completes the acquisition of Jinhu tire, Shuangxing is expected to leap to the tenth largest tire manufacturer in the world, that is, China's tire industry No.1 may change ownership
Copyright © 2011 JIN SHI