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Concerns Rise over US Private Equity Firm’s Interest in Pantech
Rising Concerns
Concerns Rise over US Private Equity Firm’s Interest in Pantech
  • By Cho Jin-young
  • February 23, 2015, 01:19
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South Korean mobile phone manufacturer Pantech is about to be sold. The potential buyer is a consortium led by One Value Asset Management, a U.S.-based private equity investment firm. For cash-strapped Pantech, it is a narrow escape. However, some industry watchers still express concerns about the real intention of the U.S. asset investment firm, which has no business experience related to mobile phones. They are worrying that it could be a “2nd Ssangyong Motor case,” in which the buyer re-sells the company after stealing its technologies.

According to industry sources on Feb. 22, the Seoul Central District Court is likely to allow the consortium led by One Value Asset Management to acquire Pantech as early as this week. The court initially tried to approve the acquisition of the consortium, changing the method of sale from open bidding to private contract. However, it has been delayed due to an investment procedural problem of One Value Asset in the U.S.

Even though a domestic Internet security solutions provider has recently submitted a letter of intent to take over Pantech, the court is unlikely to accept it, as the One Value Asset Management consortium is practically decided as the buyer. The industry is paying attention to the decision by the lead manager for the sale of Pantech Samjong KPMG. This will depend on whether or not the company verifies that the buyer is the key for a successful sale, in order to prevent a repeat of the Ssangyong Motor case. Samjong KPMG has the most experience in this field, as it was was in charge of selling Ssangyong Motor to Shanghai Automotive Industry Corporation (SAIC) in the past. 

An official from Samjong KPMG said, “Even though we cannot compel the sincerity of the investor, we have worked really hard to check it. Considering the business plan presented by the One Value consortium, we have concluded that the consortium is not only after Pantech’s patent rights.”

Regarding the controversy over “eat and run,” the One Value consortium argued that the possibility of patent leakage, which is the most important part of the deal, is fundamentally blocked in the contract. An official from the consortium said, “We took measures to prevent the leakage of patents in the contract.” 

The consortium is considering entering the Chinese market after the purchase of Pantech in partnership with Chinese e-commerce giant Alibaba, so worries have arisen over whether it will give up Pantech’s technologies to China. To assuage these fears, the consortium has said that Tim Sheen, chairman of Together MS, which participated in the consortium, has shares in Alibaba, as he invested in Tmall Global, an online shopping mall acquired by Alibaba. 

A key official from One Value Asset Management said, “In order to expect Chinese capital, there should be Chinese or Chinese companies among shareholders of our company or companies that take part in the consortium. However, there are none. We do not have a plan to attract Chinese capital for the operation funds in the future, either. However, we are pushing ahead with the investment attraction of sovereign wealth funds in other countries.”