Take time to get it rightHyosung Group has withdrawn its bid to acquire Hynix Semiconductor. Earlier this year, Hanwha Group also forfeited its plan to buy shares in Daewoo Shipbuilding and Marine Engineering Company, and Kumho Asiana Group, which bought Daewoo Engineering and Construction, is now trying to sell it back. These are examples of how corporations with public funding have failed to find new owners. Their failures are due to various factors, including overzealous selling, rumors about government favors and lack of financing.
Even so, their creditors and the Korea Asset Management Corporation are in a hurry to sell the companies by year’s end. The bidding price for Daewoo Shipbuilding and Marine Engineering, Hynix, Daewoo E&C and Hyundai Engineering and Construction each exceeds several trillion won (several billion dollars) and there are other companies worth several hundred billion won that are waiting to be merged and acquired, including Daewoo Electronics and Ssangyong Engineering and Construction.
But it will be difficult to find buyers for all of these companies in a market that has recently hit bottom. Large conglomerates are showing no interest because they are focused on improving their own businesses. Midsized companies that have shown interest in acquisition deals cannot afford them because they are repaying their own excessive loans.
It is true that the most important factor in selling these publicly financed companies is to ensure they are sold at full price. That is why creditor banks are so interested in selling the companies to foreign buyers. But it has been proven recently through the Ssangyong Motor incident that technology can be leaked to foreign companies in deals like these, which can have a negative impact on our national competitiveness and the industry as a whole.
It is natural to want to make the sales. But if the bids don’t take the current market conditions into account, the deals will end in failure, as we have seen with Hynix, Daewoo Shipbuilding and Marine Engineering and Daewoo E&C. Adding to the difficulty is the fact that the shipbuilding and construction industries have become stagnant while the semiconductor industry is gradually showing improvement.
Rather than speeding through deals, the government should try to balance the market. The creditors - Korea Development Bank, Korea Asset Management Corporation and Korea Finance Corporation - should think about that and take steps to decrease the shock to the market. At a time like this, it is better to take time to get things right than to rush ahead, only to fail.