Bain Capital, a US private investment firm, is set to acquire the tire steel cord business of HS Hyosung Advanced Materials Corp. for approximately 1.5 trillion won ($1.1 billion). This acquisition marks a significant move in the industrial sector, being one of the largest carve-outs by a foreign private equity firm in South Korea.
Hyosung Advanced Materials, part of the HS Hyosung Group, announced Bain Capital as the preferred bidder in a regulatory filing. The finalization of the deal is expected soon, with a definitive share purchase agreement likely to be signed by September, pending due diligence.
Initially, Hyosung valued the tire cord business at around 2 trillion won, but this figure was adjusted downward due to current market conditions. The sale process began in February, with Bain Capital ultimately outbidding domestic firms like JKL Partners and STIC Investments, which were initially considered strong contenders.
If completed, this acquisition will enhance Bain Capital's portfolio in Korean manufacturing and reflect the increasing interest of global private equity firms in mid-market industrial carve-outs in Asia.
HS Hyosung Advanced Materials is a key player in the tire cord market, producing all three major tire reinforcements: steel cord, nylon tire cord, and polyester tire cord. Its steel tire cord division leads in North America and Europe, ranking second globally. The company has established a strong international presence through strategic acquisitions, including Michelin's US steel cord plant in 2005 and two factories from Goodyear in 2011.
In the previous year, Hyosung's tire cord business generated around 900 billion won in sales and approximately 150 billion won in EBITDA. The steel cord division contributes about 40% of Hyosung's total profit.
The sale of this business is part of HS Hyosung's restructuring strategy to focus on new growth ventures, including materials for electric vehicles, hydrogen, and artificial intelligence. Vice Chairman Cho Hyun-sang, the founder's third son, is leading this initiative, aiming to position the company for future growth in these emerging sectors.
