Newbridge Capital [NBGC.PK] said it had rejected an offer from the company’s biggest shareholder, LG Group, to jointly run the broadband firm.
US investment fund Newbridge and its partner American International Group [AIG] have agreed to pay $500 million for a controlling 39.6% stake in Hanaro, providing it with a lifeline.
But the deal, which is subject to approval by shareholders, faces opposition from LG Group, Hanaro’s top shareholder with an 18% stake.
LG Group has long wanted to take control of Hanaro and build the telecom business into a main growth engine. It has vowed to scuttle the foreign investment deal. But Newbridge is confident the LG move would fail.
Hanaro has started receiving proxy votes from minority shareholders, which account for about 55% of Hanaro, with most overseas shareholders believed to be behind the Newbridge deal.
If the deal goes through, it is understood the new owners would move to make Hanaro a key player in mergers between smaller service providers in the country.
It would consider merging with smaller broadband rival Thrunet [KOREQ.PK], which has been up for sale since filing for court receivership in March.
In the mid to long-run, Hanaro is likely to consider merging with Dacom Corp [15940.KS], the country’s second-largest fixed-line operator owned by LG Group.
The investment group is also helping arrange $600 million in syndicate loans for Hanaro.
South Korea’s telecom industry has seen dramatic growth. About 70% of its 48 million people have access to the Internet, with 11 million having high-speed connections, the highest broadband penetration rate in the world.
