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GS Homeshopping likely to submit bid for KT Rental

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Published : 2014-07-15 20:34
Updated : 2014-07-15 21:04

GS Homeshopping, the country’s leading home shopping company, is preparing to make an offer to acquire a majority stake in the car rental firm KT Rental, a local daily said on Tuesday.

Reports of GS’ intentions came about a month after KT Corp. publicly announced the sales of two nonmajor affiliates ― KT Rental and KT Capital ― as part of its efforts to regain financial soundness and focus on the ICT business.

GS Homeshopping CEO Huh Tae-soo has reportedly been in talks with global investment banks and accounting firms to request a thorough review of the possible takeover.

Industry watchers speculate that GS Homeshopping is setting the wheels in motion to develop a new growth engine and consolidate its position as a retail giant.

As to whether GS’ acquisition of the country’s leading car rental firm will bring gains or losses, analysts held mixed views.

“It’s highly doubtful whether acquiring an irrelevant business unit will create a synergy effect with the home shopping unit,” said an analyst from Daewoo Securities, declining to be identified.

Another Daewoo analyst, however, pointed out that GS found a good opportunity to buy a profitable business outside the stagnant home shopping market, though GS appears to be in no rush to do a deal.

Market watchers predict that KT Rental will come with a price tag of between 600 billion won and 700 billion won ($584.6 million and $681 million).

KT Rental, established in 2005 and merged with Kumho Rent-A-Car in 2010, is the country’s No. 1 car rental service firm with 25 percent market dominance.

An insider reportedly hinted at the possibility of the retailer cooperating with GS Retail for the acquisition, as it only holds about 856 billion won in liquid assets, according to the company’s financial statement in the first quarter of 2014.

A spokesman from GS Homeshopping, however, said the company has not made any concrete decisions about the acquisition.

“We do have a general interest and have done studies on acquiring different business units. But nothing has been discussed concerning the KT Rental acquisition,” the spokesman said.

Currently, Hyundai Department Store Group, Hyundai Motor Group and SK Networks are also rumored to be in the race for the acquisition of the KT affiliate.

By Suk Gee-hyun (monicasuk@heraldcorp.com)

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