Orion to bid for Tesco's S Korean unit, Homeplus
15 June 2015
South Korea's Orion Corp said today it was considering bidding for UK supermarket retailer Tesco PLC's South Korean unit, valued at about $6 billion.
According to Orion, a snack maker and manufacturer of the "Choco Pie" dessert, it had made no decisions on whether to pursue a formal offer. The company had received information memorandum about the sale of the Tesco unit, Homeplus, according to a spokesman who spoke to Reuters earlier.
Tesco had hired HSBC for exploring a sale of its South Korean operations, according to people familiar who spoke to Reuters earlier this month.
Meanwhile, analysts remained unimpressed with the news as they consider South Korea's second-largest supermarket chain to be too large for Orion, which had been through a restructuring to rebuild its financial health.
Meanwhile, Orion had reportedly appointed Nomura Financial Investment to consult on the primary bidding for the merger and acquisition deal set to kick off late June, The Korean Herald reported.
Much of the funds were expected to come from the public share offering of its Chinese unit, as also the sales of treasury stocks, and according to industry sources the company was considering inviting private equity funds to join it in its bid.
If Orion made it into the retail distribution business, it could create synergy with the confectionary manufacturing division and the company could also benefit from the plots of real estate Homeplus had according to a source, the report said.
The appointment of former E-Mart president Hur Inn-chul as its vice president late last year testified to its ambitions, according to observers.
According to an analyst, in 2006, Hur led the acquition of Walmart Korea by Shinsegae Group, the mother company of E-Mart, which helped the discount store cement its No 1 market position. He was expected to perform that magic once again, according to an analyst.
Orion said, however, noting was final.
''It is true that we have received an IM, but it doesn't mean we would participate in the actual bidding. We are always considering various mergers and acquisitions, and Homeplus is one of many options at this moment,'' an Orion spokeswoman said.