Woori sale hangs in air as strong potential bidder backs out


The sale of Woori Finance Holdings hangs in the air once again as KB Financial Group decided not to make a bid, two days ahead of the deadline for preliminary bidding.

Board directors of the nation’s largest financial group concluded in a meeting on Wednesday that they will not take part in the preliminary bidding for Woori Finance.

Ten board directors including KB Financial chairman Euh Yoon-dae, KB Kookmin Bank chief executive Min Byong-deok and seven outside directors attended the meeting.

“They reached the conclusion in about 20 minutes, and there were no heated disputes,” a KB Financial official said.

KB Financial, which had been perceived as the strongest potential bidder for Woori Finance, began to show signs over the past couple of weeks that it might back out.

With some lawmakers including the ruling Saenuri Party’s presidential frontrunner Park Geun-hye calling on financial authorities to postpone the sale to the next administration and a private equity fund pulling out from the bid, concerns are high that the government might fail in its third attempt to sell a controlling stake in Woori.

The financial industry union vowed to go on a strike in protest of a merger between KB and Woori, adding to pressure.

TStone Corp., which had submitted a letter of intent to buy Woori last year, decided earlier not to make a bid this time.

Kyobo Life Insurance and the Korean Federation of Community Credit Cooperatives, which had considered forming consortiums with private equity funds to take part in the bid, are also hesitant.

A private equity fund named MBK Partners, the sole bidder for Woori last year, is expected to mull over a bid until the last minute.

The sale will fall through if there is no valid competition.

Under the law on state contracts, for the sale of a government-owned stake in a company, at least two entities must take part in the bid for open competition.

“It won’t be easy for private equity funds to make bids when opposition from politicians is so strong,” a financial industry official said.

“Even if they participate in the bid, you don’t know when the deal would break. It seems highly likely that the sale of Woori will be passed over to the next administration.”

Attempts to sell Woori Finance fell through in 2010 and 2011 due to lack of investor interest.

The Public Fund Oversight Committee, which handles state asset sales, is to receive preliminary bids for the 57 percent government stake in Woori until Friday.

Some 12.8 trillion won in public funds was spent to bail out Woori in 2001. Only about 5.4 trillion won of it has been recovered as the state-run Korea Deposit Insurance Corp. sold off its stakes in Woori.

By Kim So-hyun (sophie@heraldcorp.com)