SK Telecom to Buy Hanarotelecom
By Cho Jin-seo
Staff Reporter
SK Telecom said it has agreed to buy Hanarotelecom at 1.09 trillion won ($1.18 billion) in a fast-forward deal, which took less than three weeks to forge since joining the bid.
SKT said Monday that it signed a conditional contract on Dec. 1 to buy the 9.14 million shares (38.89 percent) from a consortium of two financial investors, American International Group and Newbridge Capital and their partners. The price is 11,900 won per share, which is close to what the current shareholders had wanted.
Hanarotelecom, however, said in a regulatory filing Monday evening that it was told by AIG-Newbridge that the contract had not been signed yet. Goldman Sachs, the operator of the deal, did not answer phone calls.
SKT said the contract is secured no matter what Hanarotelecom said. ``We confirm that we did sign the contract. We do not know how such reports were made," said spokeswoman Cindy Kang.
According to its announcement, SKT is to become the major shareholder with a total of 43.59 percent. The signing will be concluded with the government's approval.
The deal will make the SK Telecom group a 12-trillion won telecommunications giant that covers mobile phones, broadband Internet, Internet-Protocol TV and fixed-line telephone services. SKT is the largest telecom provider in Korea. Hanaro is the second largest fixed-line telephone and Internet operator after KT.
``The acquisition of Hanaro will encourage competition in the market, which will benefit consumers. It will also become an opportunity for Korea's IT industry to take a leap ahead,'' said Kim Shin-bae, CEO of SKT. ``We will do our best to develop new business models for the global market, taking advantage of our know-how in converging wired and wireless communications.''
The government hasn't opposed SKT's intention of buying Hanaro since the firm was designated as a preferred bidder on Nov. 14, and is poised to ease regulations in the telecom sector. As in most other nations, the government has the right to reject such M& A deals in the telecommunications industry, which is considered a sensitive national asset. It is not known how long the review process will take.
Hanaro turned to profit this year with the successful launching of Hana TV, the nation's first Internet-based video-on-demand TV service. The AIG-Newbridge consortium has been trying to sell their combined stake at around 1.1 trillion won, or 12,000 won per share. They bought the stake at 560 billion won four years ago.
SKT only joined the bid in mid-November, and was selected as a preferred bidder on Nov. 14.
Hanaro's labor union welcomed the announcement, though it was a little concerned about possible restructuring by SKT due to the high sale price.
``We thought the company should be sold below 1 trillion won. It seems that SKT made a generous offer because they highly evaluate the potential of IPTV,'' said Jung Su-cheol, spokesperson for the union.
The workers have been a strong support for SKT in the bidding as they have rigorously opposed other foreign investors' takeover of the firm from the Newbridge consortium. The union also demanded the AIG-Newbridge consortium share some of the profit made from the shares sale with employees, and to make social contributions.
The acquisition will produce an industry giant with a total of 27 million subscribers for wireless and wired telecommunications services. It is also expected to trigger another merger between KT and KTF, which will have 41 million customers in total.
Hanaro's share price fell 6.5 percent to 11,400 won. SKT rose 1.1 percent to 250,000 won.