SEOUL: The LG Group and a foreign partner are expected to make a counter bid to buy Hanaro Telecom Inc today, heating up a battle with a US investment group for South Korea’s second largest broadband firm.
“We’ll offer a better acquisition package for Hanaro ... Our offer has a bigger investment and higher price,” said an LG official yesterday. He declined, however, to name the foreign partner, reportedly US private equity firm Carlyle Group.
The latest development will pit US private equity funds against each other in a battle for control of Hanaro. It comes one week before Hanaro shareholders are due to meet to approve a plan by US private equity fund Newbridge Capital and American International Group (AIG) to take control of Hanaro with a US$500mil equity investment.
A report on online news provider edaily said LG, Hanaro’s top shareholder with an 18% stake, and Carlyle had agreed to invest 700 billion won (US$610mil) in the cash-strapped company in return for a more than 50% stake and joint management.
In an indirect confirmation of LG’s partner, Hanaro said its labour union had faxed a letter to Carlyle objecting to its tie-up with LG without consulting the Hanaro management and other shareholders. Carlyle officials were not immediately available for comment.
Hanaro needs fresh capital urgently as it is struggling to repay snowballing debt and compete against richer rivals such as KT Corp.
The AIG-Newbridge group has offered US$500mil for a controlling 39.6% stake in Hanaro, or 3,200 won per share. The transaction is subject to approval by Hanaro’s shareholders at a meeting on Oct 21.
The LG Group has vowed to fend off AIG-Newbridge bid, as it has long wanted to take over Hanaro and build the telecoms business into a main growth engine. It has bought Hanaro shares through affiliates to try to block the deal.
LG, South Korea's second largest conglomerate behind Samsung Group, runs Dacom Corp, the country’s second biggest fixed-line carrier, and is also the top shareholder in Powercomm Co, a cable network operator.
Additionally, LG has a mobile carrier, LG Telecom. – Reuters
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