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SK Telecom to Buy Hanaro Stake for $1.2 Billion

Reuters
Sunday, 2 Dec 2007 | 6:33 PM ET

Top South Korean mobile operator SK Telecom on Monday said it had agreed to buy a stake in broadband provider hanarotelecom for 1.09 trillion won ($1.18 billion) in cash, a near 50 percent premium on pre-acquisition talks.

The price values shares of the country's No. 2 broadband provider at 11,900 won each, slightly lower than the latest closing price of 12,200 won, but represents a 46 percent premium from the stake's valuation before talk of an SK bid started in early November.

A consortium led by American International Group and private equity fund Newbridge Capital bought the 38.9% stake for $500 million in 2003 and picked SK as preferred buyer in November.

SK Telecom will become hanarotelecom's largest shareholder with 43.6% after the deal.

Analysts had seen SK Telecom as a good strategic buyer for the stake in hanarotelecom, which has a quarter of the country's broadband market. Adding broadband to its business portfolio would enable SK Telecom to package offerings of broadband, telephone and mobile services, and trim costs.

The acquisition also raises prospects for further concentration in the country's telecommunications industry, with top fixed-line and broadband operator KT Corp increasingly likely to absorb mobile affiliate KTF.

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