Citigroup Sells Off 6.9% Stake in Daum
By Kim Tae-gyu
Staff Reporter
U.S.-based Citigroup Global Markets Financial Products sold off its stake in Daum Communications, Korea's No. 2 Internet portal operator, raising the possibility of a potential merger and acquisition (M&A).
In a compulsory filing to the Korea Exchange, Citigroup announced Monday that Citigroup had sold 6.92 percent of Daum shares late last month to MacQuarie Bank.
``Daum's unique ownership always generates rumors on takeover deals whenever there are any big transactions,'' said Kang Lok-hee, an analyst at Daishin Securities.
``This time around, I do not think it is directly associated with M&A. But its size is big enough to cause rumors in the market,'' Kang said.
Daum co-founder Lee Jae-woong and those who are close to him hold 18.76 percent of Daum shares. In comparison, foreign investors hold 27 percent.
When contacted, Citigroup said the trade had nothing to do with M&A.
``Actually, a corporate client held the Daum shares via our account and we sold them on the block trading system at the request of the client. Accordingly, this is not related to any takeover attempts,'' a Citigroup official said.
However, Kang sees things in a different way.
``MacQuarie is a financial investor, who may sell Daum shares if a company offers a good price. The buyer may be Google, Microsoft or any other outfit,'' he said.
The world's foremost search engine Google and primary software maker Microsoft were rumored to be trying to buy Daum in order to strengthen their presence in the Korean market.
Mertiz Securities researcher Sung Jong-hwa said Daum's cheap price has caused M&A rumors.
``Daum is an attractive target as its market capitalization is less than 400 billion won, merely one-15th of top player NHN's six trillion won,'' Sung said.
``This invites a variety of M&A scenarios. And this is likely to continue down the road,'' he said.