By Kim Yoo-chul
Staff Reporter

Will LG Group join open bidding to buy a controlling stake in Hynix Semiconductor?

Group officials and LG sources told The Korea Times that the group's earlier passive stance toward the controlling stake valued at some $3 billion has not yet changed.

Months ago, LG Electronics CEO Nam Yong said that the group's electronics unit has no interest in running the chip business and added LG learned how to survive without memory chips.

"The group's top decision makers have reached a broad consensus that more measures would be needed to nurture future growth engines. But that doesn't necessarily mean LG will participate in an auction next month," an LG representative said Wednesday.

"We are now busy for a possible management reshuffle," he said. LG Group will conduct a management reshuffle sometime this month.

Despite such internal views, market analysts consistently say LG could be the "right buyer" for Hynix, the world's No. 2 chipmaker, considering its key business portfolios.

Meanwhile, creditors of Hynix have been stepping up efforts to persuade LG to join the bidding, according to banking sources and industry watchers.

"Conglomerate(s) among the nation's big 7 have shown an interest to buy a stake," a source from a creditor bank said, adding LG would get big synergy if it buys the semiconductor maker.

LG Electronics is the group's core affiliate. LG Electronics is the world's No. 2 maker of flat-screen TVs and No. 3 mobile handset maker.

"Markets will give more credibility to LG if it joins the bidding. The acquisition of Hynix means LG's business portfolios could be realigned with chips, displays and mobile phones just like Samsung," Song Jong-ho, an analyst at Daewoo Securities, said.

According to banking sources, creditor banks have recently re-approached KT, SK Group, POSCO and LG Group over the Hynix sale.

"POSCO is placing its top M&A targets on Daewoo Shipbuilding and Daewoo International, while KT was picked as the preferred buyer for Kumho Rent-A-Car. SK Group plans to put more focus on the telecom-related sector," another source said.

Hynix shareholders unanimously agreed to restart the sale in a public auction after Hyosung dropped its preferred bid.

Lead shareholders will advertise the sale to domestic companies around Dec. 20 and receive letters of intent by the end of January.

Creditors of Hynix may attempt to sell some of their collective 28 percent stake in the company through a block deal in the absence of strategic bidders.

Hynix nearly collapsed in 2001 under heavy debts after chip prices plunged, but it was bailed out by its creditors, who became the company's shareholders via several debt-for-equity swaps.

Hynix, which was formed through the merger of Hyundai Electronics and LG Semiconductor in 1999, has been up for sale since late last year and has undergone extensive restructuring, including financial support from its shareholders.

After a two-year slump, the global chip industry is showing a sign of a strong recovery, turning Hynix to profit.

CEO Kim Jong-kap recently said the maker would report even stronger earnings in the fourth quarter from the third, and chip prices would fare better in the first quarter of 2010 than in previous years.

yckim@koreatimes.co.kr