Korean Pension Fund Blocks Visteon Buyout of Halla

South Korea's National Pension Service has declined to sell its 8.1% stake in Halla Climate Control Corp. to Visteon Corp., thus dooming the U.S. supplier's tender offer.

Visteon's 913 billion-won ($796 million) bid for the 30% of the Korean company it doesn't already own expires on Tuesday. Without at least some of the pension fund's Halla shares, the U.S. supplier won't reach the 95% ownership threshold it set for completing the buyout.

Visteon was hoping for a merger that would produce $20 million in annual savings and create the world's second-largest supplier of vehicle climate control systems after Denso Corp. The Van Buren Township, Mich.-based company may make a higher offer.

The pension fund says it decided not to sell because of Halla's value and future growth prospects. NPS did comment on whether it would consider a sweetened bid. The fund reduced its Halla holding from 9.8% earlier this month but remains the company's second-largest shareholder.

Analysts tell Reuters that NPS a big shareholder of Hyundai Motor Co. probably also was influenced by the automaker's purported opposition to letting a foreign company gain full control of Halla. Hyundai buys 75% of its air-conditioning and heating systems from Halla, according to the news service.