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Hynix Shares Rise on Expectation of Sale

Reuters
Wednesday, 16 Apr 2008 | 10:59 PM ET

Shares in Hynix Semiconductor rose on expectations a long-awaited sale of a $4.8 billion stake in the chipmaker could start soon, after a media report that Hanwha Group was interested in a deal.

Chemical-and finance-focused Hanwha Group is looking into Hynix for a potential acquisition, Korea Economic Daily reported citing an unnamed group official. The South Korean group is seeking to diversify its business portfolio, it said.

"We are interested in a number of M&A targets in the market and studying them," said Ju Cheol-beom, a Hanwha Group spokesman. "But the report that we are seeking to buy Hynix (stake) is not true."

Hynix shares jumped in the Asian session , leading the wider South Korean market.

But flagship companies in Hanwha Group fell as investors are cautious about its potential entry into the semiconductor business, which needs heavy investment and depends on seasonal demand swings for electronics goods.

Explosive maker Hanwha Corp dropped almost 4 percent and Hanwha Chemical shed over 1 percent. Brokerage Hanwha Securities fell over 4 percent.

Hanwa has yet to make any decision on which specific company it would bid for, he added. This year will see auctions for big stakes held by former creditors in major firms such as Hyundai Engineering & Construction and Daewoo Shipbuilding and Marine Engineering, as well as Hynix.

Domestic financial firms, led by Korea Exchange Bank, own a combined 36 percent stake in Hynix after converting debt owed by the chipmaker into equity during a cash crisis at Hynix. At Wednesday's market close, the stake was worth 4.8 trillion won (US$4.8 billion).

Credit Suisse has been picked to advise on the sale of the stake.

But prominent bidders are yet to emerge. LG Group, which media and industry experts had speculated was a potential buyer, has repeatedly denied its interest.

KEB declined to comment. A Hynix spokesman declined to comment on the report, adding the company maintains its position that it needs an owner.

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