REFILE-UPDATE 2-S.Korea's Doosan mulls sale of liquor unit

(Refiles to add name of newspaper in paragraph 8) (Adds analyst comment, share price)

By Kim Yeon-hee

SEOUL, Dec 5 (Reuters) - South Korea's Doosan Corp (000150.KS) is considering selling its spirits-making division after receiving "attractive" offers for the business, the group said on Friday, in a deal reportedly worth up to $500 million.

The prospective sale comes after food, beverage and clothing company Doosan sold its packaging unit, Doosan Techpack BG, to private equity fund MBK Partners for 400 billion won ($270.1 million) last month, to shore up its balance sheet.

The move may fan expectations more cash-strapped conglomerates in South Korea will sell juicy assets.

Firms are looking to shield themselves from the deepening economic downturn and attract investments from foreign private equity funds in a selling spree reminiscent of the 1997-1998 Asian crisis.

But some analysts are not convinced the possible sale of Doosan's steady cash generator is the best strategy in an economic downcycle. Doosan Corp's shares fell 3.5 percent by 0400 GMT, underperforming a 1.6 percent rise in the wider market .

Jeon Yong-bum, an analyst at Dongbu Securities, said Doosan Group was taking steps to focus more on heavy industry but cautioned about the possible sale of the profitable unit.

"There are also concerns whether Doosan will be able to sell the unit at the right price," he said.

The Korea Economic Daily reported MBK Partners and another private equity fund, Asia-focused Affinity Equity Partners, were interested in Doosan Corp's liquor unit, without citing sources.

The newspaper cited an unnamed industry source as saying the spirits making unit would fetch between 500 billion-700 billion won ($338-$473 million).

MBK and Affinity Equity could not be immediately reached for comment.

Shares in Lotte Chilsung Beverage Co (005300.KS) however jumped 4.5 percent as the firm was viewed as a strong buyer for Doosan Corp. Lotte Group spokesman Park Sang-sup said the group was studying whether it would be bidding for the liquor unit.

Doosan Liquor Business Group, a division of Doosan Corp, produces wines and a popular brand of soju, the traditional Korean spirit.

"Since we sold a packaging unit on Nov. 13, we have received calls to sell our liquor division from those interested in that business," Doosan Corp said in an emailed note.

Spokesman Bae Hyung-sik said the sale of the liquor business would help the company as it transforms into a holding firm but declined to comment on the estimated proceed.

ASSET SALES IN THE PIPELINE

Doosan's move comes as Belgian brewer InBev NV INTB.BR is trying to sell South Korea's No. 2 beer company Oriental Brewery to help finance InBev's purchase of U.S. brewer Anheuser-Busch Cos Inc, sources briefed on the matter had told Reuters in September. [ID:nN02413785]

Oriental Brewery was also sold by Doosan in 1998 and 2001 in two tranches in the wake of the Asian financial crisis.

Doosan's liquor business, closely competing with unlisted Jinro Ltd, posted a 21.4 billion won operating profit against sales of 341.9 billion won last year, according to the Korea Economic Daily.

Other mid-sized conglomerates in the country, including the Kumho and Hanwha groups, are also planning to sell assets to fund recent acquisitions such as Daewoo Engineering (047040.KS) and Daewoo Shipbuilding (042660.KS).

The slumping won KRW= and government keenness to atract foreign capital are making South Korea assets attractive to foreign buyers. ($1=1481.0 Won) (Additional reporting by Park Jung-youn; Editing by Keiron Henderson and Anshuman Daga)