SEOUL, South Korea—China's Qingdao Doublestar Co. said it has signed an agreement with Kumho Tire creditors to buy a 42 percent stake in the South Korean tire maker in a deal that could enable Doublestar to further expand in China.

The $830 million deal could help turn Doublestar into China's largest tire maker. Doublestar would purchase 66.4 million shares for $830 million, or at about $12.55 per share. That would be about 75 percent higher than Kumho Tire's closing price of about $7.17 per share on March 10. Kumho Tire increased nearly 7 percent in Seoul on March 13, the biggest gain since September.

If successful, Doublestar said it expects the combined company to be among the top 10 global tire makers. The firm ranked 34th in Rubber & Plastics News' 2016 Global Tire Report with $740.8 million in sales.

Based on 2016 sales figures, the combined company would be worth $3.4 billion, which would put it slightly ahead of the No. 10 company in the 2016 rankings—Zhongce Rubber Group Co. Ltd. reported $3.39 billion in sales for 2016.

Kumho ranked 14th at $2.66 billion. Its North American business accounts for about 22 percent of its sales. It opened its first U.S. manufacturing plant in Macon, Ga., in May 2016 with an annual capacity of 4 million tires.

"China is the key for Kumho Tire to break through difficulties that the company is facing as 40 percent of Kumho Tire's manufacturing capability is based in China," Doublestar said in an emailed statement. "Doublestar can help Kumho Tire to improve financial and operational hardships, and ultimately to achieve higher growth."

However, to accomplish these goals Doublestar will need to fend off a potential counter bid from Kumho Tire Chairman Park Sam-koo, who has said he wants to put together a consortium of investors to buy back the stake.

Photo by William Schertz, Tire Business file photo
Kumho executives and local dignitaries help with a ribbon cutting honoring the opening of Kumho's Macon, Ga. plant last year.

Just hours before the Doublestar deal was disclosed, Kumho Asiana Group, Kumho's parent company, said in a statement that Park would give up the right of first refusal if his request to buy the Kumho Tire stake is allowed. Park is in talks with several strategic investors including a Chinese company, said Yun Byung-chul, Kumho Asiana Group's chief financial officer.

Upon receiving notice from the creditors, Park has a month to decide whether or not he wants to buy Kumho.

"We are not opposing Doublestar because it is a Chinese company," Yun said in a briefing in Seoul, referring to claims by South Korea that China has been retaliating against Korean companies for the country's decision to allow the U.S. to deploy a missile defense system on the Korean peninsula. "Considering various aspects of business management that we've done for about six decades, we expect there is more synergy with our buyout rather than a takeover by a foreign company," he added.

A spokesman at Korea Development Bank, one of the creditors leading the stake sale, said its stance against Park making a bid has not changed.

Kumho Asiana Group put Kumho Tire and Kumho Industrial Co. under a debt restructuring plan in December 2009. Creditors including state-owned Korea Development Bank and Woori Bank reached an agreement to convert debt to equity in 2010 and hold a total of 42 percent of shares in Kumho Tire.

Doublestar's bid comes at a time when Chinese auto parts makers are buying U.S. parts makers at a record pace. China National Chemical Corp. acquired the world's fifth-largest tire maker Pirelli & C. S.p.A. in a $7.7 billion deal that went final in 2016 and resulted in Pirelli's shares being delisted.