Belle of the Ball
It has been confirmed that four companies have taken part in the bid, after the KDB finished receiving preliminary bids for KDB Daewoo Securities and KDB Asset Management on Nov. 2. The KB Financial Group, which has prepared to take over KDB Daewoo Securities for a long time, Mirae Asset Securities, and Korea Investment Holdings, the parent company of Korea Investment, submitted preliminary bids as expected. The Employee Stock Ownership Association led by the labor union of KDB Securities also jumped on the bandwagon.
A possibility has been steadily raised that private equity funds or China-based capital will take part in the bid. But none of them really took part. Industry experts expect that this bid will be a three-runner race among The KB Financial Group, Mirae Asset Securities and Korea Investment.
As of the first half of this year, Daewoo Securities had total owner’s equity of 4.3049 trillion won (US$3.8 billion) and ranked second after NH Investment and Securities (4,495.4 billion won). The acquisition of Daewoo Securities will jump one of the three bidders into the number-one company in the securities industry. In particular if Korea Investment takes over Daewoo Securities, Korea Investment will be able to become a dominant player.
But analysis says that as the acquisition also can expand a possibility of the restructuring of Daewoo Securities by Korea Investment, the labor union of Daewoo Securities took part in the preliminary bid. The labor union took part in the bid in the type of an employee stock ownership association. They specify neither strategic investors nor financial investors, it was known that they are actively seeking investors among Korean and foreign institutional investors.
Some experts analyzed that the labor union may become a dark horse in the bidding war by partnering with the KB Financial Group or foreign investors. In the future, the KDB will go over the preliminary bids for seven to ten days through the Financial Affiliate Sell-off Promotion Committee and select candidates for a main bid.
Candidates for the main bid will conduct due diligence on Daewoo Securities for three to four weeks. Based on the results of due diligence, they will take part in the main bid. The KDB will select the preferred bidder around the end of this year and complete the sell-off of Daewoo Securities in the first half of next year.
The KDB has 140,481,383 common stocks (a 43 percent stake) of Daewoo Securities while its KDB Asset Management stocks total 7,778,956 (a 100 percent stake). The value of its stocks of Daewoo Securities amounted to 1,538.2 billion won based on the stock price of 10,950 won at the close of the market on Nov. 2 while the book value of KDB Asset Management priced the company for 63.4 billion won.