Posco, CJ make final bids for Korea Express, Lotte drops out

Posco, CJ make final bids for Korea Express, Lotte drops out

Seoul: South Korean steelmaker Posco and food-to-entertainment group CJ Group said on Monday they have submitted their final bids for a controlling stake in the country’s top logistics company Korea Express Co Ltd.

But the deal received a new twist on Monday as CJ, advised by Samsung Securities Co Ltd, said it would seek compensation and legal action after Samsung Group unit Samsung SDS tied up with rival bidder Posco, while third bidder Lotte Group walked away at the last minute.

The deal is for an at least 37.6% stake worth about 1.1 trillion won ($1.0 billion) at the current market value.

CJ Group said it did not drop out after the affiliate of its adviser Samsung Securities announced the tie-up with rival Posco.

The surprise tie-up announced on Thursday raised the prospect of the alliance winning in the auction, as it would allow Korea Express to add the country’s biggest business group to its core customer base.

CJ, led by a cousin of Samsung Group’s heir apparent Lee Jae-yong, said in a statement that the company would take legal action against Samsung Securities, which has advised CJ Group since March over its financing plan, acquisition valuation and post-acquisition integration plan. The group fears a potential confidential information leak and Samsung Securities dropped its advising role last week to avoid potential conflict of interest.

“We feel betrayed by Samsung Securities’ immoral act, which is unprecedented in M&A history," CJ said in a statement.

Lotte Group, which had submitted preliminary bids for the controlling stake in March, pulled out at the last minute, saying Korea Express had become less attractive as the group was looking at a number of overseas M&A targets, a Lotte spokesman said.

Lotte’s interest also weakened after the logistics company recently sold off terminal assets that the retail group had been eyeing, the spokesman said.

A preferred bidder would be picked by as early as Tuesday, said an official with direct knowledge of the matter.

Shares in Korea Express shares closed down 4.7% on Monday after a jump over the past two trading session.