No bidder for Hynix stake, market sale to be sought

SEOUL Fri Feb 12, 2010 1:55am EST

SEOUL (Reuters) - Leading shareholders of Hynix Semiconductor (000660.KS) have attracted no bid for the chip maker's controlling stake by the extended deadline and will likely have to unload a large chunk of their $3.1 billion stake into the market.

Korea Exchange Bank 004940.KS said on Friday it and other creditors-turned shareholders of Hynix were considering selling part of their combined 28 percent stake, but would keep at least 15 percent in their hands for future sale to a domestic buyer.

The shareholders and the Korean government have been excluding foreign bidders from auctions to protect high-end technologies.

"We will consider all options, including selling part of the stake," KEB said in a statement. "We can also discuss receiving a letter of intent from any interested buyer in the future."

Shareholders of Hynix, the world's No. 2 maker of memory chips, had extended the deadline for preliminary bids by two weeks.

It marks the second auction failure, after an earlier round fell through last November when the sole bidder, Hyosung (004800.KS), walked away from the process.

While the memory chip industry is rebounding in an upcycle, its highly cyclical nature and heavy investment requirement have limited investor appetite for Hynix, which competes with home rival and industry leader Samsung Electronics (005930.KS) and Japan's Elpida Memory 6665.T.

KEB said even after top shareholders reduce their holdings, Hynix would not likely face a hostile takeover bid given the financial burden for acquisition.

Hynix shares finished down 1.6 percent before the KEB announcement, compared with the wider market's .KS11 0.3 percent loss. Concerns over share overhang and discounted sales have pressured Hynix shares recently, despite a strong recovery in demand for Hynix's stronghold computer memory chips.

($1=1152.2 Won)

(Reporting by Rhee So-eui; Editing by Ken Wills)

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