[Bandogroup's Affair] ① Following Hanjin Kal's Management Participation, Bids for 'Kiwi Media' Acquisition

Selected as Preferred Negotiation Partner in Stalking Horse Sale Bidding

[Asia Economy reporters Jeongsoo Lim, Hyungsu Park, Hyunseok Yoo] Bando Group, which emerged as a dark horse in the Hanjin Group management rights dispute through its acquisition of Hanjin KAL shares, is pushing to acquire Kiwi Media Group, a KOSPI-listed entertainment company that has filed for court receivership. Having walked a 40-year path in construction, Bando Group is interpreted to be seeking investments in various fields for business diversification and succession as it transitions to the second generation.

According to the investment banking (IB) industry on the 13th, the 'Pacific Industrial Consortium,' led by Bando Group affiliate Pacific Industrial, was recently selected as the preferred bidder to acquire Kiwi Media. After due diligence and other procedures, they plan to sign the main contract with the seller around the 23rd. However, it is uncertain whether the main contract will be finalized due to objections from the 'LNP Company Consortium,' which participated in the bidding but was rejected.

The bidding, supervised by Samil Accounting Corporation, was conducted using the stalking horse method. Stalking horse is a merger and acquisition (M&A) method where a potential buyer is pre-selected before the bidding process. If a better buyer appears than the pre-selected one, the company is sold to the higher bidder, while the original potential buyer is compensated for bidding costs, etc. This method is used to avoid private contracts and to increase the sale price of the asset.

Pacific Industrial reportedly submitted a purchase price of 13 to 14 billion KRW and was selected as the preferred bidder. Although the LNP Consortium offered a higher price of 15 billion KRW, Pacific Industrial was considered superior in terms of actual acquisition capability, such as proof of financing.

Pacific Industrial is a real estate management company operated by Shin Dong-cheol, Executive Director of Bando Construction and son-in-law of Bando Group Chairman Kwon Hong-sa. Chairman Kwon owned 100% of the shares but transferred all shares to Executive Director Shin and his daughter Bora after 2009. The company rapidly grew by successfully executing projects such as the Dongtan 2 New Town development through its wholly owned subsidiary Pacific Development.

Recent performance has been somewhat sluggish. According to consolidated financial statements in 2018, it recorded sales of 21.7 billion KRW and an operating loss of 910.78 million KRW. This is a significant decline compared to sales in the 200 billion KRW range and operating profits in the 50 billion KRW range in 2016 and 2017.

Therefore, it is analyzed that Pacific Industrial has recognized the growth limitations of its real estate management and development business and has started diversifying its business. This is interpreted as being in line with Bando Group's recent increase in investment in Hanjin KAL shares and its declaration of 'management participation.'

There is also speculation that this is for the new business entry of Chairman Kwon Hong-sa's daughter, Bora. It is analyzed that in the future, management of Bando Holdings, which controls Bando Construction and Bando General Construction, will be entrusted to Kwon Jae-hyun, Executive Director of Bando Development, while Bora and Executive Director Shin will expand affiliates centered on Pacific Industrial.

However, since Kiwi Media has complex creditor interests and its main entertainment business is also sluggish, some reactions express difficulty in understanding why Bando Group specifically targeted a struggling entertainment company for acquisition. The Bando Group side has not disclosed specific reasons for participating in the Kiwi Media bid, citing that the deal has not yet been finalized.

Kiwi Media is engaged in film, content, and performance businesses. It invested in films such as "The Great General Kim Chang-soo," about the youth of independence activist Kim Gu, and "The Outlaws," produced in 2007 based on the true story of cracking down on ethnic Korean Chinese gangsters. In the content business sector, it has contracts with girl group GWSN and modern pop duo NICK&SAMMY, managing their management and album production businesses.

As of the third quarter of last year, it recorded cumulative sales of 30.6 billion KRW and an operating loss of 5.2 billion KRW, showing poor performance. After struggling with recent financial difficulties, creditors filed for court receivership at the Seoul Bankruptcy Court in October last year.

The largest shareholder is LH (formerly Kiwi Company), holding 2.23% of shares as of the end of September last year. Including shares held by CEO Jung Cheol-woong and Chief Producer Kim Hyung-seok, the largest shareholder group's stake is 4.13%. Once the acquirer is confirmed, a significant capital reduction is expected, greatly diluting existing shareholders' stakes.

This content was produced with the assistance of AI translation services.