* Samsung C&T confirms biggest deal by Group affiliate
* To pay $772 mln, says source; Samsung C&T mum on price
* At that price, deal is positive, say analysts
* Samsung C&T to hold 90 pct stake, KNOC 10 pct
(Adds link to FACTBOX)
By Elzio Barreto and Cho Mee-young
HONG KONG/SEOUL, Nov 30 South Korea's
Samsung C&T and state-run oil firm KNOC are buying U.S. oil and
gas company Parallel Petroleum from private equity firm Apollo,
in a deal that enables the Samsung Group to expand its natural
Samsung C&T confirmed the deal on Wednesday,
though it would not disclose the price. A source close to the
deal told Reuters that Samsung C&T and KNOC agreed to pay $772
million to Apollo Global Management LLC, the massive New
York-based private equity firm founded in 1990 by former Drexel
Burnham Lambert banker Leon Black.
The acquisition is the biggest deal ever by an affiliate of
Samsung Group, South Korea's top conglomerate. The group has
traditionally sealed smaller, bolt-on buys.
The construction and trading unit of Samsung Group, which
also includes Samsung Electronics, has been in talks
for months with Apollo about the takeover.
Samsung C&T plans to own 90 percent of the firm, with
state-run Korea National Oil Corp (KNOC) the remaining 10
percent, Samsung C&T said in a statement. It added that Samsung
C&T plans to invite financial investors for some stakes in the
"Samsung C&T has been looking to delve into the energy
business, and acquisition of Parallel is a fruition of such
efforts. Though we would have to look more closely at the
pricing and such, the fact that it has made such as decision is
positive," said Cho Joo-hyung, an analyst at Kyobo Securities.
Byun Sung-jin, an analyst at Mirae Asset Securities, said:
"Market had initially speculated the deal would be worth around
1 trillion won, so $772 million sounds comparatively reasonable.
I think return on equity on the deal would be around 10 to 15
percent at that pricing, which is OK."
KNOC also confirmed the deal. Apollo declined to comment
when reached at its Hong Kong offices earlier.
(FACTBOX on recent M&As by KNOC, Samsung C&T.
Parallel, based in Midland, Texas, develops and invests in
"long-lived" oil and natural gas fields in West Texas and New
Mexico, including a shale gas project near Forth Worth.
According to the Samsung C&T statement, Parallel
owns eight oil-producing fields and two gas fields, while
holding three exploration reserves. Its daily production is at
8,400 barrels, and its total reserve reaches 69 million barrels,
Apollo bought Parallel in 2009 for about $483 million.
Parallel was advised by Scotia Capital on the deal, while J.P.
Morgan advised Samsung C&T.
MAJOR PUSH FOR RESOURCES
Samsung Electronics chairman Lee Kun-hee urged Samsung C&T
to step up overseas resources development, according to a local
newspaper in July.
Samsung C&T is beefing up resource business, which currently
accounts for a fraction of its total revenue, to boost new
Shares in Samsung C&T closed up 400 Korean won at 66,100 won
Countries including China, India, Thailand and South Korea
have been aggressively working to secure long-term supply of raw
materials, whose demand is driven by emerging countries'
South Korea, the world's fifth-largest crude importer and
second-largest liquefied natural gas (LNG) buy, wants energy
companies to supply 30 percent of the country's combined oil
and gas imports from projects almost all abroad by 2019, up
from 9 percent in 2009, as it looks to increase
Apollo had assets under management of approximately $65
billion as of end-September in private equity, credit-oriented
capital markets and real estate funds invested across a core
group of nine industries.
($1 = 1145.2500 Korean won)
(Additional reporting Hyunjoo Jin and Jungyoun Park in Seoul,
Stephen Aldred and Michael Flaherty in Hong Kong; Editing by
Jonathan Hopfner and Muralikumar Anantharaman)