1. What Happened?
On July 28, 2025, Hyosung Advanced Materials announced the selection of Bain Capital Private Equity (Asia), LLC as the preferred bidder for its tire cord division. The estimated value of the deal is approximately ₩1.5 trillion, with a final decision expected to be announced on October 27.
2. Why the Divestiture?
Despite a decline in sales, Hyosung Advanced Materials reported an increase in operating profit in its Q1 2025 report. However, high debt levels remain a concern for the company’s financial stability. The proceeds from the sale are expected to be used to pay down debt, improving the financial structure and providing resources for future investments. Divesting the tire cord business, which is sensitive to raw material price fluctuations, is also expected to mitigate risks associated with economic downturns.
3. How Will This Impact the Stock Price?
- Positive Impacts: Improved financial structure, reduced risk, potential stock price increase.
- Negative Impacts: Short-term sales decline, job insecurity, potential technology leakage.
While the sale may initially trigger a stock price increase, the long-term outlook will depend on the final sale price, terms of the deal, and the company’s future business strategy.
4. What Should Investors Do?
Investors should closely monitor the final sale price and conditions, the company’s plan for utilizing the proceeds, and its future business strategy. Attention should also be paid to external factors such as raw material prices, exchange rates, and global economic indicators. A cautious approach, awaiting further information disclosure, is recommended over hasty investment decisions.