Hahn & Co inks $3.6bn Korea carve-out

The firm has agreed to buy a 70% stake in Halla Visteon Climate Control from its parent company

Scott Hahn’s Korea-focused private equity firm Hahn & Co has signed an agreement to buy the Korea unit of US auto parts maker Visteon Corp in a corporate carve-out transaction worth $3.6 billion, the largest private equity deal in Korea in recent years.

The transaction value for Halla Visteon Climate Control (HVCC) represents around 10.1x EBITDA for the 12 months to 30 September 2014, a statement from the parent company said.

The Korean business, which is traded on the Korea Stock Exchange, provides automotive heating solutions, such as heating ventilation and air conditioning, compressors, fluid transport and electric, hybrid and fuel cell vehicle thermal systems. The business employs about 15,500 people.

Hahn & Co will team up with South Korean tire maker Hankook Tire for the deal, which is expected to complete in the first half of 2015.

“HVCC is Korea's largest and the world's second largest provider of thermal management solutions and will be an excellent fit within our existing portfolio and strategy. Customers of HVCC will continue to benefit from its globally renowned technology solutions, highly respected management team, strong balance sheet, dedication to innovation and expanding global market presence,” Hahn & Co chief executive Scott Hahn said in a statement.

“Together in partnership with Hankook Tire, we believe we can help HVCC expand its customer base and global reach and further improve upon HVCC's operating efficiency and technological expertise. Both of our firms are confident that the current management team of HVCC will continue to deliver excellence to its customers, its employees and to its shareholders.”

A number of large global corporations have resigned to selling off their Korea units, providing big buyout opportunities for private equity firms. Many of these foreign corporates with Korea operations are in deleveraging mode, either because they’ve become more bearish on Asia, or because they’ve come under pressure from headquarters to dispose of assets.

For example, in March, The Carlyle Group acquired a 100 percent stake in ADT Korea, Tyco International's Korean security business, for $1.93 billion, buying Tyco Fire & Security Services Korea and its subsidiaries (ADT Caps, Capstec and ADT Security), which together form ADT Korea.

The deal was Korea’s largest US dollar buyout since 2008, Carlyle said earlier.

Moreover, Korea’s largest deal in 2013 was also a corporate carve-out, with MBK Partners’ €1.27 billion purchase of ING Korea Life Insurance from the restructuring Netherlands-based parent.