S Korean Hyosung group confirms Hynix bid
Thursday, 24 September 2009
SEOUL, Sept 23 (AFP): Hyosung, a minor business conglomerate in South Korea, confirmed Wednesday that it has offered to buy a major stake in Hynix Semiconductor, the world's second biggest memory chip maker.
"We have submitted a letter of intent to creditors banks," a group spokeswoman told the news agency.
Creditors have controlled Hynix since they rescued it with US$4.6 billion in 2001 and 2002. They now plan to sell a 28 per cent stake worth 3.5 trillion won ($2.9 billion), based Wednesday's closing price.
However, shares of Hyosung Corp, the conglomerate's flagship company, plunged 14.9 per cent to 84,400 won.
"Hyosung's acquisition of Hynix is illogical," Daewoo Securities analyst Song Jong-Ho told Dow Jones Newswires, adding that Hynix would be a huge burden for the group.
Others suggested a strong financial partner should acquire Hynix because it continuously needs massive cash to upgrade technology.
"Given Hyosung's limited cash resources, we believe successful completion of a stake sale would be difficult," Kim Han-Joon of US investment bank Goldman Sachs said.
Hyosung, which has interests ranging from chemicals to heavy machinery, may run into funding problems, Daewoo Securities analyst James Song said, citing insufficient cash flow and liabilities estimated at 3.6 trillion won.
At the end of last year, Hyosung's total assets stood at 6.1 trillion won while Hynix's assets were estimated at more than 13 trillion won.
"We have submitted a letter of intent to creditors banks," a group spokeswoman told the news agency.
Creditors have controlled Hynix since they rescued it with US$4.6 billion in 2001 and 2002. They now plan to sell a 28 per cent stake worth 3.5 trillion won ($2.9 billion), based Wednesday's closing price.
However, shares of Hyosung Corp, the conglomerate's flagship company, plunged 14.9 per cent to 84,400 won.
"Hyosung's acquisition of Hynix is illogical," Daewoo Securities analyst Song Jong-Ho told Dow Jones Newswires, adding that Hynix would be a huge burden for the group.
Others suggested a strong financial partner should acquire Hynix because it continuously needs massive cash to upgrade technology.
"Given Hyosung's limited cash resources, we believe successful completion of a stake sale would be difficult," Kim Han-Joon of US investment bank Goldman Sachs said.
Hyosung, which has interests ranging from chemicals to heavy machinery, may run into funding problems, Daewoo Securities analyst James Song said, citing insufficient cash flow and liabilities estimated at 3.6 trillion won.
At the end of last year, Hyosung's total assets stood at 6.1 trillion won while Hynix's assets were estimated at more than 13 trillion won.