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S.Korea's SK Telecom, STX battle for Hynix stake
SEOUL (Reuters) - South Korea's SK Telecom (017670.KS) and STX Corp (011810.KS) entered the fray to buy a $2.3 billion stake in Hynix Semiconductor (000660.KS), raising hopes of a successful sale by creditors of the world's No. 2 computer memory chipmaker at the third attempt.
SK Telecom, the nation's biggest telecoms firm, and shipping-to-shipbuilding group STX said separately they had submitted their initial interest to creditors for the 15 percent stake in the first round of bidding which closed on Friday.
A successful bid would mean a shift in focus and a first step into the highly cyclical computer chip business for either firm, something investors and analysts have been cool on.
"The acquisition plan is not in line with what SK Telecom has presented for its future strategy," said Choi Yoon-mi, an analyst at Mirae Asset. "It is a distracting development when it has to put resources into the stated goal of growing its content and mobile platform operations."
Shares of SK Telecom tumbled as much as 6.8 percent on Friday to its lowest level in more than eight years.
"We expect the deal to pave the way for us in securing future growth from promising semiconductor industry, which will benefit from expanding smartphones, tablets and Internet TV segments," SK said in a statement.
"It will also help us shift away from intensively competitive local mobile market."
Shares of STX Corp edged up 0.7 percent after losing more than 6 percent in the past two days following its announcement of a likely bid for Hynix, which trails local rival Samsung Electronics (005930.KS).
Prior to the auction closing, shares in Hynix finished up 0.8 percent, while SK Telecom shares pared losses to close down 3.2 percent.
STX Corp reiterated its plan on Friday to sell assets and tie up with a Middle East-based sovereign wealth fund to finance the acquisition.
It said the group will reveal the name of the fund before the final bidding.
"The two firms seem quite serious about the bidding as STX Corp showed its financing plan with a Middle East fund at an early stage... This bid race could drive up premiums to over 10 percent to the current Hynix share price," said Nam Tae-hyun, an analyst at IBK Securities.
"In terms of synergy, there's nothing much for the two bidders to gain from a Hynix deal."
Deutsche Bank cut its target price for SK Telecom by 8 percent, citing uncertain synergies from the potential deal.
"We suspect the primary motivation for SK Group could be the desire to shed its image as a domestic-oriented conglomerate, by acquiring a manufacturing exporter," it said in a research note.
Hynix declined to comment on the auction on Friday.
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 part of the auction to raise the odds of success after two previous auctions failed.
Nine Hynix shareholders including Korea Exchange Bank 004940.KS, Shinhan Bank (055550.KS) and Woori Bank (053000.KS) are offering 88.5 million shares of Hynix worth around 2.4 trillion Korean won ($2.3 billion) at the current market value.
The auction is part of a series of corporate asset sales by Korean banks and the government after they took control of liquidity-strapped firms in the wake of the Asian financial crisis in late 1990s.
Sales attempts have been not very successful, partly because failed attempts over several years by U.S. fund Lone Star LS.UL to sell its stake in a local bank cooled foreign interest in Korean assets.
Creditors of Hynix plan to hold the next round of bidding in August and close the deal before the end of this year. (Additional reporting by Hyunjoo Jin; Writing by Miyoung Kim; Editing by Muralikumar Anantharaman and Lincoln Feast)
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