The local financial and business sectors are bracing for a wave of mergers and acquisitions.

Big-ticket M&A deals are expected to pick up this year and next year, as shareholders are resuming sales of companies that were put on hold during the global financial crisis.

Firms that will be put up for sale include Hynix Semiconductors, Daewoo Shipbuilding & Marine Engineering and Daewoo International in deals expected to fetch more than 3 trillion won ($2.6 billion) each.

In the financial sector, the Korea Exchange Bank and Woori Finance Holdings will be put up for sale, which will trigger the consolidation of the banking industry.

Kumho Asiana Group, a Korean conglomerate, said Saturday that it will announce a preferred bidder today for a controlling stake in Daewoo Engineering & Construction Co. in an effort to sell the builder this year. A Middle Eastern sovereign fund, a Russian company and a U.S. builder submitted bids for the stake, which analysts estimated at around 3 trillion won.

The planned sale of KEB, which could fetch 6 trillion won, is also drawing keen attention from the banking sector.



Lone Star, a U.S. buyout fund which is the biggest shareholder of KEB, said last month that it wants to sell Korea`s No. 6 bank within six months to 12 months. On Friday, Kim Seung-yu, chairman of Hana Financial Group, joined his counterparts at Kookmin Bank and the Korea Development Bank in expressing interest in KEB.

Min Euoo-sung, chief executive of Korea Development Bank, also told reporters on Friday he is "vigorously" considering the purchase of the KEB while Kookmin CEO Kang Chung-won reiterated his interest in KEB on Nov. 17.

Woori Finance Holdings will also be put up for sale, as the Korean Deposit Insurance Corp., which owns 73 percent of the No. 3 banking group, is planning to sell a 7 percent stake in the holding company through a block trade within the year.

The state-owned company is seeking to sell 23 percent of Woori Finance including the 7 percent stake and to offer the remaining 50 percent to a strategic buyer. Hana Financial Group and an overseas financial firm or buyout fund and a consortium led by the National Pension Service, are mooted as the potential bidders for the deal, which is estimated at more than 5 trillion won.

Shareholders also speed up the sale of restructured companies.

Creditors of Hynix Semiconductors plan to decide on Wednesday whether or not to restart the sale of the world`s No. 2 memory chip maker via an auction. An auction will be pursued should more than 75 percent of Hynix shareholders approve. Should the auction fail to draw a bidder, Hynix shareholders led by KEB, plan to sell 10 to 15 percent of the 28 percent share that they hold via a block trade.

Creditors of Daewoo Shipbuilding & Marine Engineering plan to pick a lead manager to sell their controlling stake in the shipbuilder in a bid to start the sales process next year.

The sales process for Daewoo International, a trading and energy development company, will start next month, with Korea Asset Management Corp. planning to announce its sales next month, and to complete the process by the end of June.

Hyundai Engineering & Construction is also expected to be put up for sale next year.

"As the global economy shows signs of recovery and there is ample liquidity, the M&A market is expected to grow twice or three times in size next year than this year," Jo Jae-hoon, an analyst at Daewoo Securities, said.

However, analysts said some companies may face difficulty in finding buyers given that a slew of companies will be put up for sale and that economic uncertainty lingers. "Short-term capital surged from 90 trillion won to 645.5 trillion won as of September from a year ago. It is possible that the capital will flow into the M&A market when the economic uncertainty eases," said Yoon Hyun-jong, an analyst at IBK Securities.

(hjjin@heraldm.com)



By Jin Hyun-joo