CMB Behind-the-Scenes Negotiations...Will Differences Narrow Between Stock Swap and Cash Purchase?

Cable 'Aljja' CMB Sale Accelerates
Payment Method Key... Price Gap Also Needs Narrowing

[Asia Economy Reporter Koo Chae-eun] SK Telecom and CMB, currently engaged in private acquisition negotiations, are reportedly negotiating the payment method for the acquisition amount in the form of a 'stock swap.' SK Telecom has expressed to CMB its preference to mix stock swaps rather than paying 100% in cash. There is also a possibility of adopting a mixed structure of stock swaps and cash purchases, similar to the TV Broad case, by attracting financial investors (FI).

According to industry sources on the 21st, SK Telecom is conducting behind-the-scenes negotiations to acquire the cable TV company CMB, with discussions ongoing between both parties regarding the payment conditions. Both sides are reportedly coordinating opinions on a mixed method of cash and stocks. Previously, SK Telecom successfully completed an acquisition negotiation (M&A) last year through a stock swap with Taekwang Industrial, so it is highly likely that the 'TV Broad M&A model' will be followed in this CMB acquisition as well. In the TV Broad deal, Mirae Asset Daewoo participated as an FI and invested 400 billion KRW, enabling the sale of TV Broad shares held by shareholders other than Taekwang Industrial, thereby reducing SK Telecom's acquisition burden and completing a strategic deal.

On the other hand, Lee Han-dam, chairman of CMB who owns 40.83% of the shares, is known to prefer receiving cash and transferring the entire stake rather than relinquishing the position of the largest shareholder like in HelloVision or TV Broad. If Chairman Lee insists on this method, negotiations between the two sides could reach a deadlock. There is also a significant difference in price expectations. SK Telecom expects the price to be in the range of 300 to 400 billion KRW, while CMB considers 500 to 600 billion KRW as the 'appropriate price.'

In the pay-TV market, SK Telecom is regarded as having the highest motivation to acquire CMB. SK Telecom affiliates (24.17%) are engaged in a close competition with LG Uplus (24.91%), which successfully acquired HelloVision, for the second-largest market share, facing the necessity of acquiring additional cable companies. Although the difference with LG Uplus is a narrow 0.74%, SK Telecom, the number one in the wireless market, has a strong motivation to escape the 'third place' position. An industry insider said, "SK Telecom has extensive M&A experience and will pursue a strategy to gain maximum benefits at minimal cost, while CMB will try to maximize its valuation, considering that time is not on the seller's side," adding, "Since decision-making is difficult for both sides, there is also a possibility of switching to an open bidding process."

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