Nongwoo Bio, the nation’s No.1 vegetable seed breeder, will be put on sale early next year as three local bidders submitted letters of intent for a takeover deal, according to industry sources.

The three local bidders are STIC Investments, IMM Private Equity and the state-run National Agricultural Cooperative Federation Economics Group. Foreign seed giants like Monsanto, once aggressive bidders on local seed companies, did not jump into the race, sources said.

Nongwoo Bio, which is listed on the Kosdaq, the nation’s secondary bourse, was put on the merger and acquisition market early this month as owner Ko Joon-ho sought to sell his shares, including managerial rights, to secure the cash to pay off 100 billion won ($95 million) in inheritance taxes.

The taxes were levied on assets, including shares, inherited from his father, company founder Ko Hee-sun. The ruling Saenuri Party’s two-term lawmaker died of lung cancer in August. Currently, the junior Ko and his family members hold a 52.83 stake in the company.

Industry watchers saw NongHyup as a strong bidder for the takeover deal as the government aims to turn the seed industry to exporting. Under the Golden Seed Project, the Ministry of Agriculture, Food and Rural Affairs has supported seed-related R&D projects since 2012.

”NongHyup seems to have a strong interest in acquiring Nongwoo Bio to turn its small-scale seed business affiliate into a globally competitive one,’’ said an official from a foreign seed company doing business in Korea.

The biggest hurdle ahead for NongHyup is the buyout cost. According to industry sources, about 185 billion won will be required to buy out shares on sales. In addition, bidders have to pay a premium for managerial rights. Private equity funds could have the upper hand in paying a higher premium, sources said.

Nongwoo Bio, established in 1981, is appealing to private equity funds as its vegetable seed business has high growth potential.

The company holds a 27 percent share in the domestic high-value-added vegetable seed market, ahead of U.S.-based Monsanto with 23 percent and Japan-based Sakata Seeds with 13 percent, as of June 2013, a report from Eugene Investment and Securities said.

Nongwoo Bio’s operating profit margin reached 13 percent last year on 60.7 billion won in sales and 16.1 billion won in operating profit.

The company’s vegetable seed exports have been on the rise, in particular, in China.

“Chinese demand for Nongwoo-patented vegetable seeds, including radish and carrot, has risen on double-digit growth per year, and sales from the Chinese market are expected to near 50 percent of the company’s total revenue next year,’’ said Yoon Hyuk-jin, a stock analyst from Eugene Investment & Securities.

Beijing Shinong Seed, Nongwoo Bio’s Chinese subsidiary, is among the top 10 of some 8,000 seed companies in China.

Besides its Chinese arm, Nongwoo Bio runs three overseas branches in the U.S., India and Indonesia.

“Nongwoo Bio, categorized as an agricultural corporation, is also a corporate tax-free enterprise,’’ Yoon said.

By Seo Jee-yeon  (jyseo@heraldcorp.com)