Mando moves to thwart Visteon over South Korean unit

SEOUL Tue Aug 7, 2012 8:40am EDT

SEOUL (Reuters) - South Korean car parts maker Mando (060980.KS) wants to buy Halla Climate Control Corp (018880.KS) and has moved to secure a stake, potentially thwarting any bid by Visteon Corp (VC.N) to take full control of this key link in Korea's automotive supply chain.

Mando, which has close ties to Halla's chief customer Hyundai Motor (005380.KS), said on Tuesday it had agreed the right to buy an 8 percent stake in the maker of high-end air conditioning and heating systems from South Korea's National Pension Service, worth $176 million at current market prices.

"We think Mando is the right candidate to enhance the corporate value of Halla Climate Control," Mando said in a statement, adding that it was willing to discuss Halla's future with Visteon.

Tuesday's announcement sparked a 13 percent tumble in Halla's shares to 23,000 won as the prospects receded for a full buyout by Visteon.

The shares had surged to a record high of 28,200 on July 5, the day Visteon made an offer worth $800 million for the 30 percent of Halla it does not already own. But Visteon announced on July 24 that the offer had failed after the pension fund balked.

Halla was founded as a joint venture between Mando and Ford Motor (F.N), but Mando sold its stake to Visteon, a former Ford subsidiary, as it struggled with the Asian financial crisis in the late 1990s.

Halla now gets more than 60 percent of its revenue from Hyundai Motor Group, South Korea's biggest car maker. Mando is run by a cousin of Hyundai Motor Chairman Chung Mong-koo.

Analysts said that while the South Korean industry and authorities seemed keen to keep Halla in Korean hands, it was too early to predict the end game in the jostling for control of Halla, whose heating and cooling systems are especially sought after for electric vehicles, which require sophisticated climate control mechanisms.

"Mando expressed its intention to buy Halla Climate shares, but we are not sure whether it will succeed," said Dongbu Securities analyst Yim Eun-young.

"Visteon has two opposite cards it could play," added Kim Yong-soo, an analyst at SK Securities, noting it could either agree to sell to Mando, or continue maneuvering for full control. "It's premature to predict what card it will choose."

Mando was quick to claim it would make a better parent for Halla. "Some experts say there is a possibility that Visteon itself will be put up for sale," it said in the statement.

Visteon last week reported a slump in sales and cut its earnings forecast for the year, citing lower vehicle production in Europe, South America and China.

New directors nominated by an activist investor are leading a push to break it up, people familiar with the situation said in November of last year.

(Additional reporting by Joyce Lee; Editing by Edmund Klamann and Mark Potter)

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