Woori seeks to Form Consortium While Hana Pursuing M&A

The battle for Woori Finance Holdings is heating up, as the nation’s largest financial has expressed its intention to stand on its own feet, while Hana Financial Group is seeking to take over the state-run lender.

Woori Bank CEO Lee Chong-hwi said Monday that it plans to form a consortium of investors to buy a controlling stake in the financial group, which was put up for sale last week, the head of its bank unit said Monday.
The remarks came after the state-run Korea Deposit Insurance Corp. began to accept bids over the weekend for a 56.98 percent stake, worth about $6 billion.

Hana, the nation’s fourth-largest banking group, has openly expressed interest in taking over Woori, but Woori has pushed for finding a few big investors to jointly buy the stake in order to avoid falling under the control of a smaller rival.

“For the sake of independent privatization, we should form a consortium among domestic and foreign big investors,” Lee Chong-hwi, chief executive of Woori Bank, said in a monthly speech to bank employees.
“Putting the banking group under joint ownership by a small group of shareholders, rather than one dominant owner, is the most realistic solution for the privatization of Woori Finance, and it would also ensure a stable governance structure at the group,” the CEO said.

Woori has asked a few industrial groups, including steelmaker POSCO and information technology service giant KT, to buy some stakes in the group. However, so far not a single group showed any intention to buy stakes.

Recently a KT spokesman said the IT heavyweight has no plan to buy a Woori stake and about a month ago POSCO Chairman Chung Joon-yang told local reporters the world’s third largest steel company is not interested either.

Hana is moving to secure funds to buy the bigger rival by putting its real estate property up for sale. The boardroom of Hana approved a plan to sell the main office of Hana Daetoo Securities, a brokerage arm of Hana, last week.
The 23-floor building in Yeouido, a local center of financial services firms, is valued at around 300 billion won. Industry watchers said Hana decided to sell the building to secure enough cash in preparation for the acquisition of Woori.

Hana is also asking global financial firms to join the M&A deal. The company said so far a couple of investors have shown interest.
“A few overseas international financial companies said they are interested in joining the Woori bid,” Hana Spokesman Lee Jung-dae, said.
He said that there has been positive feedback in the process of inviting investors. “Thanks to the friendly investment support, we may not need to prepare many assets for the deal.”

Analysts said it is too early to predict the future of the deal, and said anything is possible at the moment.
“Nothing has been decided yet. If Woori attracts sufficient investors, it can survive on its own ability,” Choi Jung-wook, a senior analyst from Daishin Securities, said.

Others view Hana is in better position than Woori now.
“I think Hana has taken the initiative to lead the M&A deal. Hana is betting the group’s destiny on the deal, while Woori will have a difficult time to find financial investors,” Lee Hyuk-jae, an analyst from IBK Investment & Securities said.