Kumho aims to buy back Buslines

Kumho Asiana Group plans to buy Kumho Buslines back from a private equity fund, but the nation’s 17th-largest conglomerate is concerned that the price is becoming too high.

The group, which owns companies such as Asiana Airlines and Kumho Tire, said yesterday that it will enter the acquisition process for the express bus operator once the sales lock-up period ends on Saturday.

The fund, which is jointly run by IBK Securities and KStone Partners, has already picked Bank of America Merrill Lynch as the managing firm for the sales process and has selected Anjin Accounting as an advisor.

Following its liquidity crisis in 2012, Kumho Asiana sold Kumho Buslines to the fund along with its stake in Seoul Express Terminal and Daewoo E&C.

With a plan to repurchase the bus operator in the future, the group asked the fund to hold the sale for two years and give the priority purchasing right to Kumho Asiana’s affiliates once the sales lock up expired.

Kumho Terminal, which is entirely owned by Asiana Airlines, acquired a 30 percent stake in the equity fund last year and received the priority purchasing right.

Chairman Park Sam-koo wants to reacquire Kumho Buslines as the company is symbolic for the transport conglomerate. Park’s father and the group’s founder, Park In-chon, started their business with the bus operator in Gwangju, which led to success.

“Kumho Asiana Group started from Kumho Buslines, which represents the South Jeolla region, and if it is sold to another group, the people in Gwangju and South Jeolla will not like it much,” a group spokesman said.

Kumho Asiana added that if another company acquires the bus operator, then it will not allow the buyer to use the “Kumho” brand.

Despite its strong commitment to repurchasing the bus operator, Kumho Asiana said it is concerned that the price of Kumho Buslines is becoming too inflated. According to local media reports, the cost of Kumho Buslines could rise to 600 billion won ($578 million), which is more than double its evaluated value in 2012.

The group said that it has set money aside for the sale but wants to see a lower price tag. Kumho Terminal last year received 500 billion won from Shinsegae Group for the long-term lease of its terminals in Gwangju and more than 300 billion won is currently available for the company’s use, according to a group insider.

Analysts said that Kumho Buslines is an attractive company although railway expansion in the country could hurt its stable earnings. Kumho Buslines operates some 2,400 buses worldwide.

BY JOO KYUNG-DON [kjoo@joongang.co.kr ]