STX says may bid for Hynix as Hyundai Heavy drops out

SEOUL Wed Jul 6, 2011 8:17am EDT

A man walks past solar panel displays by South Korea's Hyundai Heavy Industries at the International Photovoltaic Power Generation (PV) Expo in Tokyo March 2, 2011. REUTERS/Yuriko Nakao

A man walks past solar panel displays by South Korea's Hyundai Heavy Industries at the International Photovoltaic Power Generation (PV) Expo in Tokyo March 2, 2011.

Credit: Reuters/Yuriko Nakao

SEOUL (Reuters) - South Korea's shipping-to-shipbuilding group STX Corp (011810.KS) said on Wednesday it may bid for a 15 percent stake in Hynix Semiconductor (000660.KS), reviving hopes for a $2.4 billion deal after Hyundai Heavy Industries (009540.KS) dropped its bid plan.

SK Holdings (003600.KS), the holding company for a telecoms-to-refining conglomerate, told the stock exchange it has yet to decide on a bid. Friday is the deadline for bids to be submitted.

"We are considering bidding for Hynix to diversify our business...and may form a consortium with a sovereign wealth fund in the Middle East," STX Group said in a statement.

It said the group is considering asset sales to secure acquisition funding.

The third sale attempt by creditors-turned-shareholders of Hynix appeared to be dead early Wednesday after Hyundai Heavy, which had been the sole potential investor to publicly express its interest, said it would not bid for Hynix.

Concerns about exposure to the notoriously volatile chip industry and a lack of synergies between the world's No.1 shipbuilder and No.2 chipmaker have pressured Hyundai Heavy's shares in recent weeks.

"We have decided not to submit a letter of intent for Hynix," Hyundai Heavy said in a filing to the Korea Exchange.

The firm said in a separate statement that the move was based on the view there would be few synergies between its business and the chip sector. Hyundai has been the sole potential investor to publicly express interest in Hynix.

'NO BIDDERS YET'

Creditors rescued Hynix from a debt crisis in 2001, stemming from one of the industry's worst downturns. They have since scaled back their stake, but have failed to complete a full sale with investors reluctant to jump into the cyclical memory-chip sector.

They have been tapping Korea's big business groups to attract bidders and planned to allow Hynix to sell up to 10 percent of new shares as a part of the auction to raise the odds of success.

"There are no bidders who have submitted their interest yet and we are quite concerned about the auction," said a source who has direct knowledge of the deal.

Korea Exchange on Wednesday asked five business groups to clarify rumors on their potential interest in Hynix. LG Corp (003550.KS), Hyosung Corp (004800.KS) and Dongbu CNI

(012030.KS)

denied the speculation, while SK and STX flagged their potential interest.

Shares in Hynix closed down 5.4 percent after falling as much as 7.9 percent on Wednesday, while Hyundai Heavy shares finished up 6.4 percent after gaining nearly 9 percent earlier.

Hyundai Heavy shares have fallen around 11 percent over the past month since it first expressed its interest in Hynix, lagging a 2 percent gain in the wider market .KS11.

Nine Hynix shareholders including KEB, Shinhan Bank (055550.KS) and Woori Bank (053000.KS) are offering 88.5 million shares of Hynix worth around 2.5 trillion won ($2.3 billion) at the current market value.

($1 = 1066.850 Korean won)

(Additional reporting by Hyunjoo Jin; Editing by Jonathan Hopfner and Muralikumar Anantharaman and Matt Driskill)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.