Share price plunge clouds S. Korea's takeover deals

By Lee Minji
SEOUL, Aug. 24 (Yonhap) -- The recent stock market tumble has cast a shadow over the outlook of big corporate takeover deals in South Korea as buyers and sellers are taking stock of its pluses and minuses, market watchers said Wednesday.
Bearing the brunt of the recent financial turmoil sparked by the first-ever U.S. debt downgrade and the European fiscal crisis, the main Korea Composite Stock Price Index (KOSPI) tumbled as much as 18 percent this month.
The plummet has sent companies in the midst of takeovers, including top logistics firm Korea Express, scurrying to tweak their strategies to minimize its impact, which would inevitably affect sale prices.
Food and entertainment conglomerate CJ Group reportedly called on the sale manager of Korea Express Tuesday to cut the purchase price by more than 3 percent as the company's share price suffered a free fall.
Korea Express closed at 85,500 won (US$79) on Wednesday, down 34 percent from 130,500 won on June 27 when CJ bid for the company. A day later, CJ was selected as a preferred bidder after offering to pay 1.85 trillion won, or 215,000 won per share. The deal carries a clause allowing the price adjustment of a maximum 3 percent.
"It's common sense that buyers try to drive down the deal price. What is clear is that we are still firm on acquiring Korea Express and see no hurdles in the process," said a CJ official, without further commenting on the range of the price adjustment request.
An official at the state-run Korea Development Bank, which handles the sale, said CJ had demanded a price adjustment, but declined to confirm whether it is outside the specified range.
Concern is also growing that the sale of the country's No. 2 chipmaker Hynix Semiconductor could be delayed as its price tumble has put the buyer and seller in different positions.
Top mobile carrier SK Telecom submitted a letter of intent on July 8 to buy a 15 percent stake in Hynix, which could fetch at least 2.4 trillion won.
Shares of Hynix, however, nosedived 37 percent to 16,250 won on Wednesday from the closing price on July 8, which will benefit SK Telecom but erode the potential profit creditors can pocket.
The fall has led to a flurry of media reports that have cast doubt on the sale schedule and forecasts that creditors may extend the original schedule to await a recovery in the chipmaker's share price.
An official at one Hynix creditor denied the reports, saying the sale plan will proceed according to the original timeline.
Concern over the takeover deals comes on the heels of several cases where share price falls led to botched transactions.
Market watchers say the government's recent decision to suspend the sale of Woori Finance Holdings Co. was partly due to a fall in share prices of the top banking group, which would hamper the government's goal to maximize public fund redemption.
South Korea decided Friday to suspend its sale of Woori Finance after a consortium led by local private equity fund MBK Partners Ltd. made a lone bid on Tuesday to purchase a minimum 30 percent of the government's 56.97 percent stake.
In 2009, local conglomerate Hanwha Group aborted talks on the purchase of Daewoo Shipbuilding & Marine Engineering after share prices plummeted in the aftermath of the 2008 global financial crisis.
mil@yna.co.kr