'Chaebol' conglomerates on global shopping lists<\/p>\n
By Frederic Garlan<\/p>\n
SEOUL (AFP): South Korea's struggling "chaebol" conglomerates
\nneed money desperately and their dire circumstances are
\nattracting a host of potential suitors from around the world.<\/p>\n
South Korea's financial crisis represents a unique opportunity
\nfor foreign businesses which still believe in the market here and
\nWestern emissaries are now feverishly negotiating the purchase of
\nsections of the giant conglomerates.<\/p>\n
"I have never seen (such) 'industrial tourism'," said Alain
\nPenicaut, Paris National Bank's general manager and CEO for
\nKorea.<\/p>\n
"The Americans are in town as never before," he said.<\/p>\n
Paralyzed by massive short-term debt, which has grown
\ninsupportable after a crippling two-year slowdown, the chaebols
\nare now struggling for survival.<\/p>\n
Ten of them are already on the brink of bankruptcy and others
\nare now ready to give up subsidiary businesses to salvage core
\noperations.<\/p>\n
"Lots of businesses which don't have cash are ready to sell
\nsubsidiaries, to release funds and save their core business,"
\nsaid a European diplomatic source.<\/p>\n
French companies are generally less interested in South Korean
\nfirms than those in America but Penicaut says he has been in
\ncontact with two or three groups keen to see if there is anything
\nin chaebol portfolios they may be interested in buying.<\/p>\n
Hanwha, the country's eighth biggest conglomerate, announced
\nTuesday that talks were at an advanced stage with one of the
\nworld's top seven oil companies for the sale of its refinery and
\ndistribution operations. The company wants the sale to go ahead
\nto claw back 3,000 billion won (US$2.1 billion) from its total
\nestimated debt of 7,000 billion won.<\/p>\n
Hanwha is negotiating with a knife at its throat -- its
\nbankers gave it an exceptional loan of 200 billion won on Monday
\nand the market is alive with rumors of a voluntary liquidation.
\nIf agreement is reached, Royal Dutch-Shell, the choice of the
\npress as mystery buyer, will become number four in South Korea's
\noil market which is currently completely closed to foreigners.<\/p>\n
In October, another conglomerate in trouble, Ssangyong, sold
\nits paper napkins and diaper making business to Procter and
\nGamble of the United States for $69 million, in the apparently
\nvain hope of salvaging its automobile production unit. Ssangyong
\nmust decide by the end of the month whether to sell its
\nautomobile subsidiary to its huge competitor Daewoo.<\/p>\n
Foreign groups operating joint venture firms in South Korea
\nare at the forefront of those expected to make bids for chaebol
\nunits.<\/p>\n
"It's turning out well for European companies who generally
\nlike to have total control over their foreign units," the
\nEuropean source said.<\/p>\n
The German chemical group BASF has already taken some stakes
\nfrom Hanwha in a joint venture run by the two firms for an
\nundisclosed price.<\/p>\n
Penicaut says groups already bankrupt "died from megalomania,"
\nin other words diversifying too far from their core business.
\nFor example, the underwear manufacturer Ssangbangwool owes its
\nfailure to its heavy investments in the southwestern Muju ski
\nstation. There is already one potential U.S. investor interested
\nin the business -- none other than pop superstar Michael Jackson
\nwho has already paid the firm a visit.<\/p>\n
In a similar story, biscuit-maker Haitai made unwise
\ndiversifications in heavy machinery.<\/p>\n
"It is vital that they go back to doing what they know how to
\ndo," said Penicaut.<\/p>\n
A particular attraction to foreign fixers who decide to gamble
\non South Korea is that people here tend to buy quality goods.
\nIf the chaebols do find professional managers with the skill to
\noverhaul business strategy they could quickly regain their former
\nglory.<\/p>",
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