Several companies are fighting to buy Korea Express, one of the leading parcel operators inSouth Korea, which has been put up for sale by its struggling minority owner Kumho Asiana and
creditor banks. A deal could be worth as much as $1.5 billion.Three Korean business conglomerates, steelmaker Posco, retail chain Lotte Group and mixedcompany CJ Group, have placed bids for a controlling stake in the troubled parcel and logisticscompany. The Korea Development Bank (KDB), which is managing the sale of Korea Express, said awinning bidder will be selected in mid-May and the sale contracts signed in June.
A stake of 37.6% in Korea Express is up for sale and is widely described as giving effectivecontrol of the company. This stake incorporates shares owned by KDB and Asiana Airlines, which eachhave a 24% holding in the company. Estimates of the sale value vary widely as the company’s shareprice has been rising in recent weeks and analysts are trying to assess what kind of a premium abuyer would be prepared to pay. Observers put the figure at between $1 billion and $1.5billion.
All three bidders would seek to achieve synergies if they took control of Korea Express, whichhas sea freight terminals at the country’s main ports, a nationwide network of some 10,000 vans forexpress delivery and a freight transport fleet of some 5,000 trucks. Posco would be able to use thecompany’s services and assets for steel and other transportation needs, Lotte could take advantageof the express delivery network while CJ Group could merge its smaller parcels business CJ GLS withKorea Express to create a new industry leader in Korea.
Several factors lie behind the planned sale. Kumho Asiana, the Asiana Airlines parent company,is in financial trouble and is seeking ways to raise funds. The KDB has bought Kumho’s stake inDaewoo Engineering. This combination gives the KDB the effective decision-making power over thefuture of Korea Express. Kumho Asiana bought a 60% stake in Korea Express for an estimated $4billion in 2008 through its two affiliates Asiana Airlines and Daewoo Engineering &Construction Co.
In 2009, Korea Express had sales of 1.8 trillion won (€1.1 billion) and operating profits of94.5 billion won (€60 million). Last year it was aiming for revenue of 2.1 trillion won andprofits of 115 billion won. The company is reportedly targeting revenue of 2.3 trillion won andoperating profits of 125 billion won this year.
Last November company president Won-Tae Lee said he aimed to create “a new Korea Express” withrevenues of five trillion won and operating profit of 400 billion won by 2015. He also declared thecompany wanted to grow globally and generate 50% of sales from international business.
