KB Financial Picked as Preferred Bidder for Hyundai Securities

  • Purchase would create South Korea's third-biggest brokerage
  • The 23% controlling stake has a market value of $320 million

KB Financial Group Inc. said it was picked as the preferred bidder for a controlling stake in Hyundai Securities Co. in a deal that could create South Korea’s third-biggest brokerage by capital.

The acquisition of a 23 percent stake in Hyundai Securities would diversify KB’s non-banking business, the Seoul-based company said Thursday in an e-mailed statement, without putting a value on the transaction. The deal involves about 53.38 million shares being sold by Hyundai Merchant Marine Co. and some minority shareholders, valued at 366.7 billion won ($320 million) based on Hyundai Securities’s closing share price of 6,870 won Thursday.

KB beat Korea Investment & Securities Co. after losing a $2 billion Daewoo Securities Co. deal to Mirae Asset Financial Group last year, helping it to boost its market share of the brokerage business. The combined capital of KB’s existing brokerage unit and Hyundai Securities would be about 3.9 trillion won, overtaking Samsung Securities Co.’s 3.5 trillion won, according to data from the Korea Financial Investment Association.

Choi Jung Wook, an analyst at Daishin Securities Co., said Friday in a report that the acquisition will create synergy for KB. He said the 1 trillion won that local media has reported that KB proposed to pay for the stake is a little expensive. Korea Economic Daily reported Wednesday that KB offered more than 1 trillion won.

Hyundai Merchant, South Korea’s second-largest shipper, expects to complete the sale in the second half of 2016, the Seoul-based company said in an e-mailed statement. Hyundai Merchant has been seeking to raise cash through asset sales, including its stake in the brokerage affiliate. Slowing trade and excess capacity resulted in the company posting losses for five of the past seven years.

Since 2013, Hyundai Merchant has also agreed to sell its stake in Hyundai Pusan New-Port Terminal in South Korea to Singapore’s PSA International Pte, its logistics business to Orix Corp. of Japan and its liquefied natural gas shipping business to a South Korean equity fund.

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