Six Bidders Vying for Eugene Securities
By Lee Hyo-sik
Staff Reporter
Lotte Group, Kookmin Bank, HSBC and three other potential bidders are seeking to acquire Eugene Investment Securities, formerly known as Seoul Securities, from its parent Eugene Group which has been grappling with a liquidity shortage.
Some market analysts project the preferred bidder will likely be selected within three months as the group is poised to select the lead manager for the sale in the coming days. Samsung Securities and Credit Suisse are reportedly vying for that spot.
But a group executive said Eugene is still studying proposals from a number of securities firms, adding that nothing has been decided yet as to who will manage the sale of the brokerage unit.
Eugene Securities has been attracting a great deal of attention from large business groups that plan to enter the securities industry, as well as from brokerage firms that want to enlarge their size by taking over other brokers.
With the stock market undergoing a steep correction, potential bidders think that now is the right time to buy the brokerage firm as its share price has declined.
The nation's mid-sized group borrowed heavily to finance the takeover of Himart, a major local electronics retailer, for 1.95 trillion won in December last year. The ongoing sluggish business conditions have worsened its cash flow, forcing it to dispose of its securities arm in a bid to improve group-wide liquidity. The sale price is estimated at up to 300 billion won.
Eugene took over a major stake in Seoul Securities and Seoul Securities' other financial affiliates in late 2006.
Among potential bidders, Lotte Group has been most vocal about its intent to acquire Eugene Investment Securities as the conglomerate has been trying to strengthen its financial business. The group has reportedly asked Lotte Hotel and five other subsidiaries to issue corporate bonds to raise 600 billion won for its takeover bid of Eugene and other securities companies.
Lotte tried to take over CJ Investment Securities earlier this year and Prudential Investment Securities last year, but backed out at the last minute because of the high sales prices.
Kookmin is another potential bidder for Eugene as it plans to expand its securities business by combining with KB Investment Securities. The nation's largest retail lender bought Hannuri Investment Securities last November and changed its name to KB Investment Securities.
In April, it collected 375 billion won from selling its 14 percent stake in Bank International Indonesia and is reportedly planning to use the money to take over another brokerage firm on sale, including Eugene.
HSBC, Daelim Industrial, GS Group and HMC Investment Securities are also possible bidders for Eugene. A Seoul analyst said now was a good time for companies with ample liquidity to acquire other business at relatively lower prices amid the worldwide credit market crunch.