One of the biggest auctions in South Korean business history is entering its final days as suitors decide whether to take a chance on a potentially cut-price deal for card issuer LG Card.
Despite its impressive size and market scope (the second largest credit card issuer in South Korea), LG Card is currently owned by its creditors after it had to be bailed out of deep financial trouble in 2004.
In recent months the company’s creditor owners have been exploring ways to sell their shares. Initially the biggest shareholders had hoped to persuade Korean authorities to allow them to sell while minor shareholders retained their portions. However, this went against local laws and as a result, a public tender sale has been enforced.
Unfortunately for LG Card’s owners, the public tender stipulation will impose a greater financial burden for any potential buyer, which is likely to squeeze the premiums offered on share value.
Despite this, a number of suitors are believed to be in the running. Alongside overseas player Standard Chartered, domestic companies have been forming alliances to find the expected KRW5 trillion needed to buy a major controlling stake in LG Card.
Hana Financial Group and MBK Partners have already formed a bidding partnership and a new report from the Korean Times suggests Woori Financial Group may lend KRW500 billion to the National Agricultural Cooperative Federation to support its bid for the card issuer.