KB Financial wins bid to take over Hyundai Securities
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By Kim Jae-won
KB Financial Group has won a bid to buy a controlling stake in Hyundai Securities, offering more than 1 trillion won, or three times its market value, Hyundai Group and the lead manager of the sale said late Thursday.
Hyundai Group and EY Hanyoung said they picked KB as the preferred bidder for the group’s brokerage affiliate because the financial group offered the highest price for the 22.56 percent stake in the firm owned by Hyundai Merchant Marine (HMM), a shipping affiliate of the group, and other minor shareholders. The shipping company is selling the stake to pay part of its 4.3 trillion won in debts.
With the decision, KB beat its two rivals, Korea Investment Holdings and Hong Kong-based private equity firm Actis, which were also known to have offered close to 1 trillion won.
“We concluded that KB was the most preferred bidder after evaluating a wide range of criteria, including the deal price and plans to pay it among others,” said a spokesman for Hyundai Group. “With the deal, we expect to accelerate our efforts to normalize the group.”
Market watcher said that KB has paved the way for diversifying its revenue sources from non-banking affiliates, strengthening its weak brokerage house. KB failed to purchase KDB Daewoo Securities in December, losing to Mirae Asset Financial Group. In 2013, KB had lost its bid to acquire Woori Investment & Securities to NH Financial Group.
“With Hyundai Securities under our wing, we will be able to strengthen our non-banking business such as corporate investment banking and wealth management services. A balanced portfolio will help us improve our bottom line and compete with global rivals in the long term,” KB said in a statement.
KB offered the highest price ― more than 1 trillion won ($877 million) ― for the majority stake, accounting firm EY Hanyoung, which advised on the deal, said without elaborating. The majority stake was valued at 367 billion won based on Thursday’s closing price of 6,870 won.
HMM said the deal will be completed in the second half of the year and the proceeds from the deal will be spent as operating capital. The shipping company has placed non-core assets and properties on the market as part of restructuring efforts after it was hit hard by the 2008 financial crisis. Oversupply and lower freight charges have squeezed its profits in recent years.