Candidates are approved in acquisition of Kumho

The candidates who will participate in the bidding for the acquisition of Kumho Industrial, considered the biggest M&A target in Korea for the first half of this year, have been decided.

The Korea Development Bank (KDB), one of the creditors leading the sale, said Monday that all five investors who submitted a letter of intent last week to acquire Kumho have been approved.

The five candidates are Hoban Construction, IBK Securities-Keistone Partners (or IBK Fund), Jabez Partners, MBK Partners and IMM.

Shinsegae Group, which was considered one of the strongest contenders for the M&A as a leading company in the discount supermarket chain and department store business in Korea, said on Friday that it would rescind its application only two days after it announced it would join the bidding.

Shinsegae said it only wanted to protect its department store’s branch in Gwangju, which is located in Kumho Terminal, one of Kumho Industrial’s affiliates, from rivals in the business such as Lotte Group, which also runs discount chains and department stores. But since such rivals are not taking part in this M&A, Shinsegae has decided to quit the battle.

However, industry insiders say there is a chance the nation’s major conglomerates, like Shinsegae, Lotte, Aekyung Group and CJ, could join the war later as behind-the-curtains investors on behalf of one of the five bidders.

The Kumho Industrial M&A has drawn interest because ownership of the company would include the management rights of Kumho Asiana Group’s many affiliates. The company is the majority shareholder of Asiana Airlines as it owns 30.8 percent of the airline’s stake and 100 percent of Kumho Terminal, Asiana Airport Development and Asiana IDT, an IT company.

The investors will later face Park Sam-koo, the chairman of Kumho Asiana Group, who wants to regain leadership of Kumho Industrial. Park has a 5.3 percent stake in the company while his eldest son, Se-chang, vice president of Kumho Tire, owns 5.1 percent. In order to take over the ownership, Park needs to acquire a 40 percent stake in the company.

KDB said each investor will have five weeks from March 9 to submit a proposal that will include their bidding price and plans to raise necessary funds for the takeover. The price attached to the M&A is about 1 trillion won ($908 million), the industry says.

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]