Visteon’s Halla Buyout Blocked by S. Korea Pension Fund

Visteon Corp. (VC)’s attempt to buy the remaining 30 percent of Halla Climate Control Corp. (018880) is being blocked by South Korea’s National Pension Service, the country’s biggest institutional investor.

The pension service, which owns 8.1 percent of Halla, rejected Visteon’s offer after reviewing Halla’s future value and growth potential, the pension fund said in a statement in Seoul today. Visteon needs approval from shareholders representing 95 percent of Halla’s stock for the offer, which closes tomorrow.

The move is a blow to Visteon and fueled speculation the company may sweeten its bid. Visteon, which exited bankruptcy in 2010, has been seeking to buy out Halla and sell less profitable units to focus on its operations in Asia. Visteon’s market capitalization, $1.6 billion, is now lower than its 70 percent stake in Halla, which is valued at $1.61 billion.

“Visteon will probably make another offer,” said Shin Chung Kwan, an analyst at KB Investment & Securities Co. “Visteon will have to offer a better price, but they won’t give up.”

Jim Fisher, a Visteon spokesman, said the company is reviewing the pension service’s announcement and will make its own statement, reporting tender offer results, after it expires tomorrow.

The company has been reducing lower-margin revenue in interiors and lighting as it increases its focus on Asia. In combination with Halla, Visteon said it’s the world’s second- largest supplier of climate-control systems.

Shares Falling

Visteon offered 28,500 won ($24.86) a share, a premium of about 14 percent to Halla’s previous closing price. Since the July 4 offer, Halla’s stock has declined 0.4 percent to 24,850 won while Visteon fell 18 percent. Visteon slid 2.6 percent to $30.53 in New York, the lowest post-bankruptcy closing price. Halla fell 2.7 percent in Seoul trading.

Visteon has said it will cancel the offer if it doesn’t receive approval from at least 95 percent of Halla’s shareholders.

A spokeswoman for Halla, who declined to be named citing company policy, couldn’t immediately respond to a request for comment when reached by telephone.

“You never can control the outcome when you offer a price to someone,” Matt Stover, an analyst at Guggenheim Securities LLC, said in a telephone interview. “It’s harder even still when it’s in a foreign country. There are subtleties and forces that come to bear that have very little to do with the company, the offer and frankly maybe what is the best thing for the company itself.”

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net; Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net;

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Jamie Butters at jbutters@bloomberg.net