[UPDATES] Investors react positively to SK Networks' bid for for Tongyang Magic

By Park Sae-jin Posted : September 28, 2016, 08:41 Updated : September 28, 2016, 09:53

[Aju News DB]

SK Networks, a trading and retail arm of South Korea's third largest conglomerate, SK Group, saw a sharp rise in its stock price Wednesday on expectations it would acquire Tongyang Magic, a lucrative kitchen appliance maker.

Market watchers said SK Networks was selected as the preferred bidder for the country's third-largest vendor which manufactures and rents out kitchen appliances. The proposed price was estimated at 610 billion won (556 million US dollars).

The homegrown Glenwood-NH private equity consortium took over Tongyang in 2014 for 280 billion won. A 100 percent stake has been up for sale, and analysts said the consortium could reap hefty profits from the sale, citing Tongyang's enhanced brand value and good corporate earnings.

Potential buyers include three domestic conglomerates -- Hyundai Department Store Group, SK Networks and CJ Group -- as well as a number of strategic and financial investors. But SK Networks, Hyundai Home Shopping Co., AJ Networks Co. and the Unid-Stic Investment consortium submitted their bids on Tuesday.

Tongyang has posted solid growth especially in its rental service with its net profit last year soaring to 17.6 billion won from one billion won in the previous year. Sales rose 10 percent on-year to 390.3 billion won.

SK Group sees Tongyang as an attractive prey following its failed attempt to acquire a major cable channel operator.

In an effort to bolster next-generation businesses for sustainable growth in the saturated and competitive domestic market,  SK Telecom has offered to buy CJ Hellovision, a CJ unit, with a plan to merge it with SK Broadband. However, the Fair Trade Commission opposed the one trillion won deal saying it would help SK Telecom strengthen its monopolistic control of the market.

SK has been involved in active mergers and acquisitions since Chey Tae-won officially returned to the leadership of his group in March. In 2014, Chey stepped down from all key posts after he was charged with funneling group funds into his own personal investment portfolio. In August last year, he was released from prison after he served 31 months out of his 48-month jail term.

Aju News Lim Chang-won = cwlim34@ajunews.com
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