Samsung unit joins $1.4 billion bid for Korea Express stake

An employee of Samsung Electronics explains as a monitor shows the company's main factory at its showroom in Asan, south of Seoul, May 13, 2011.

SEOUL (Reuters) - Samsung Electronics' (005930.KS) affiliate said on Thursday it will partner steelmaker POSCO (005490.KS) in bidding for an estimated $1.4 billion stake in Korea Express (000120.KS), boosting shares of South Korea's top logistics firm by 15 percent.

The move marks a new twist in a brewing battle over Korea Express among the country's major conglomerates - POSCO, retail giant Lotte Group and food-to-entertainment CJ Group - and raises prospects of the cash-rich POSCO-Samsung consortium winning in the auction.

"We will form a consortium with POSCO to participate in the bid," Samsung SDS said in a regulatory filing, adding it will buy a 5 percent stake in Korea Express as part of the bid. Samsung SDS is an IT services unit of Samsung Group.

"Samsung SDS has a technological edge in logistics IT, so its participation will create synergies," said a POSCO spokesman.

Final bids for at least a 37.6 percent stake in Korea Express, which is being sold by major shareholders Asiana Airlines (020560.KS) and Daewoo Engineering & Construction (047040.KS), closes on June 27. A preferred bidder will be selected by early July.

CORE CLIENT

A 5 percent stake in the logistics firm is worth just around 153 billion won ($142 million) at current market value, but Samsung SDS's participation in the bidding raised expectations that Korea Express may win the country's biggest business group as its core client.

"Samsung's logistics demand is huge. This should raise the corporate value of Korea Express," said Shin Ji-yoon, an analyst at KTB Securities. "Samsung Group's participation could also raise the sales price of Korea Express."

Samsung Group is the parent of Samsung Electronics, the maker of handsets, TVs as well as flat screens and memory chips. There was market speculation that Samsung SDS may participate in Korea Express bid, but the company had denied the speculation.

By 0330 GMT, shares in Korea Express, whose main businesses includes parcel delivery, as well as container and shipping and land transport services, jumped by the daily permissible limit of 15 percent. ($1 = 1074.300 Korean Won)

(Editing by Miyoung Kim and Muralikumar Anantharaman)