SEOUL, South Korea—Hankook Tire and Technology Co. Ltd. is increasing its shareholding in South Korean automotive thermal management specialist Hanon Systems from 50.5 percent to 54.77 percent.
Under the agreement, Hanon Systems will issue 145 million shares at about $3.01 (KRW 4,139) per share, raising $435.9 million (KRW 600 billion), to be entirely funded by Hankook Tire & Technology.
This deal revises an earlier agreement from May, where Hankook committed about $1.3 billion to raise its stake in Hanon Systems to 50.5 percent.
The capital increase aims to "proactively secure operational funds" for improving cost structures and maintaining competitiveness in the evolving automotive sector, Hanon Systems said on Sept. 30.
Hanon noted that the global automotive parts industry has faced challenges since the COVID-19 pandemic, including supply chain disruptions, inflation and geopolitical conflicts.
As global car makers revise their electrification strategies, parts suppliers are also adapting their investment and production plans, said the components manufacturer.
Despite these hurdles, Hanon said it had seen growth through "significant new business awards" in eco-friendly vehicle platforms of major automakers.
The company now plans to complete restructuring efforts to adapt to the changing industry landscape.
"As major auto makers adjust their electrification strategies, building a flexible business structure is crucial," Nurdal Kucukkaya and Subu Nagasubramony, co-CEOs of Hanon Systems, said in a joint statement.
Hanon Systems produces parts for automotive heating, ventilation, air-conditioning, powertrain cooling, compressors, fluid transport, electronics and fluid pressure systems. Established in 1983, it is claimed to be the world's second largest player in the segment, after Japan's Denso.
Last year, Hanon Systems reported an operating profit of $211.6 million (KRW 277.3 billion) on sales of $7.36 billion (KRW 9.6 trillion), based on average 2023 exchange rates. Hankook expects to complete the deal by the end of this year.