Erae AMS’ auto parts for advanced driver assistance systems (ADAS) (File photo, courtesy of Erae)
The holding company of Hansae Co., a leading global apparel original equipment manufacturer (OEM), is eyeing expansion to auto parts production by acquiring Erae AMS Co., a supplier to General Motors Co.’s Korean operation and Kia Corp.
Hansae Yes24 Holdings Co., Hyolim Industrial Co., Shinhwa Precision & Engineering Co. and Nara Gl Inc. were the four participants in a takeover bid led by lead manager Samhwa Accounting Corp. on Monday, according to investment banking sources.
The four bidders are among the eight who submitted letters of intent (LOI) for the acquisition last month. Samhwa plans to conduct comprehensive evaluations on them and announce a preferred bidder on Aug. 23, sources added.
“Erae AMS’ parent Erae cs Co., which is under a reorganization process, is expected to accelerate normalization of its business operations if the deal is clinched,” an investment banking official said.
Market insiders said Hansae Yes24, the holding company of Hansae, clothing retailer Hansae MK Co. and online bookstore Yes24 Co., is highly likely to become the preferred bidder for Erae AMS.
Hansae Yes 24 announced on Tuesday that it joined the bid to secure new growth driver and business diversification and details of the deal are yet to be confirmed.
Hansae counts global fashion brands such as GAP, H&M and Zara among around 30 global clients, for which the Korean company makes clothes under an OEM contract. Hansae’s revenue made up 62.7% of the holding firm’s 2.73 trillion won in 2023.
The holding firm, which exports its clothes to serve countries including the US and Canada, will use the global networks for auto parts business.
Other bidder Hyolim Industrial manufactures auto parts such as knuckle and wheel carriers. Nara Gl is the parent of Nara Samyang which produces geared motor and worm gear reducers. Transmission maker Shinhwa Precision & Engineering has joined forces with Seoul-based Keystone Private Equity for the bid.
Erae cs, which started a reorganization process in April, has put an 80.6% stake in Erae AMS and a 30% stake in Estra Automotive System Co. for some 100 billion won to repay debt worth 163 billion won.
Erae AMS and Estra were formerly Delphi Automotive Systems, which was spun off from General Motors in 1999. Erae cs acquired a 42.3% stake in Delphi’s Korean affiliate for 190 billion won in 2011 and an additional 50% stake for 100 billion won in 2015 and split the company into Erae AMS and Estra Automotive.
Erae AMS supplies GM Korea Co drive systems, infotainment and autonomous driving solutions. In April, the car component maker signed a contract with Kia to supply military vehicle components worth 18.5 billion won for five years.
Erae AMS logged 10.9 billion won in operating profit last year, nearly double the surplus in 2022. Its revenue rose 7.3% on-year to reach 576.6 billion won last year.
By Jong-Kwan Park
pjk@hankyung.com
Jihyun Kim edited this article.
