(Yicai Global) Sept. 5 -- The Qingdao Doublestar Co. [SHE:000599] acquisition of South Korea's second last tire manufacturer, Kumho Tire Co. Inc. [KRX:073240;LSE:KHTC], has hit another snag.

Paik Un Gye, South Korea's Industry Minister, appeared to back Park Sam Koo, chairman of Kumho Tire's parent Kumho Asiana Group, who wants to buy back the firm, in a recent statement.

"It would be good" if Park were to form a coalition of investors and buy the firm, South Korea's Digital Times quoted him as saying. The merger also needs to consider the regional economy, global competitiveness and core technology, he added.

However, the minister only wished to explain the current situation of the acquisition, an official at his office claimed. "He has no intention to express preference for a particular acquisition object."

As a military industrial firm regulated by South Korean law, Kumho Tire should get approval from Paik to make such a large-scale equity change, and needs to pass a review from the Defense Acquisition Program Administration, the official added. "The South Korean government will review the case considering national and technical security."

Park has publicly said that Kumho should not allow Doublestar to use its brand name. If he is able to gather a team of investors to buy the firm, it is likely to immediately revoke the rights to use Kumho trademarks.

If Doublestar can't use the brand name, it will probably pull out of the acquisition, an insider said.

Creditors don't believe that Kumho Asiana Group can afford to develop Kumho Tire, but Korean media appears to support the firm staying within the country, said Kim Jeong Gil, another insider.

Kumho Asiana Group does have a preemption right, but it cannot cause losses to other subsidiaries. It's going to be tough for Park to find investors and exercise the right in such a short time, Kim added.