KKR May Buy $2.4 Bln Samsung Life Stake, Seller Says (Update4)
KKR May Buy $2.4 Bln Samsung Life Stake, Seller Says (Update4)
May 17 (Bloomberg) -- Kohlberg Kravis Roberts & Co., the world's largest buyout firm, may bid for a 17.6 percent stake valued at $2.43 billion in Samsung Life Insurance Co., South Korea's biggest insurer, a government shareholder said.
KKR submitted a letter of intent on April 29, said Kwon Dong Sung, a spokesman at Seoul Guarantee Insurance Co., which owns a fifth of the holding. It would be KKR's first investment in Asia since the New York-based firm was founded in 1976.
Samsung accounts for a third of Korea's $200 billion life insurance industry and is the biggest shareholder in Samsung Electronics Co., the world's second-largest chipmaker. Competing buyout firms, including Newbridge Capital LLC and Ripplewood Holdings LLC, have earned billions of dollars in profits from investments in Asian banks and telephone companies.
``These large funds are under pressure to deploy their capital,'' said Atsushi Abe, Tokyo-based co-president of JPMorgan Partners Asia Pte., a buyout unit of the second-largest U.S. bank. ``They will look at one or two large deals to justify putting more resources on the ground.''
Billionaire Lee Kun Hee, Korea's richest man, in 1999 gave shares of Samsung Life to creditors of another affiliate, Samsung Motors Inc., to pay 2.45 trillion won ($2.43 billion) of the auto company's debt. Yim Jun, a spokesman for Samsung Group, which Lee heads, declined to comment on the planned sale of the stake owned by creditors.
KKR's History
KKR, started by cousins Henry Kravis, 61, George Roberts, 61, and Jerome Kohlberg, 79, has raised about $25 billion in funds and completed more than 115 transactions in its 29-year history. The company's $31 billion acquisition of RJR Nabisco Inc. in 1989 is the world's largest takeover by a buyout firm,
KKR doesn't comment on ``deal speculation,'' said Ruth Pachman, a spokeswoman for the company who works at public relations firm Kekst & Co. in New York, in an e-mailed statement.
Newbridge, based in San Francisco, earned more than $1 billion this year from a five-year investment in Korea First Bank, which was sold to Standard Chartered Plc.
Ripplewood led a group, including Goldman Sachs Group Inc. and Newbridge, that reaped a fourfold return from a one-year investment in Japan Telecom Co. New York-based Ripplewood also was part of a team of investors that bought Long-Term Credit Bank of Japan Ltd. for 121 billion yen ($1.1 billion) in 2000. The buyers renamed the Tokyo-based lender Shinsei Bank Ltd. and have since sold about two-thirds of its equity to the public, reaping a more than fourfold return.
Following Permira
KKR follows Permira Advisers Ltd., the manager of Europe's biggest buyout fund, in seeking its first investment in Asia. KKR was part of a bidding group that failed to win Daiei Inc., a Japanese retailer, the Nikkei English News reported in December.
Permira, which raised 5.1 billion euros ($6.4 billion) in 2003, will probably use some of that money to make one or two investments in Japan, Permira Managing Director Guido Paolo Gamucci said last month.
Blackstone Group LP, a New York-based buyout firm, may invest as much as $1 billion in Indian companies, Chairman and Chief Executive Officer Stephen A. Schwarzman said in a statement yesterday.
Earlier today, Maeil Business Newspaper in Seoul reported that KKR is seeking to buy the Samsung Life shares for about $2 billion. Samsung Life held 7.25 percent of Samsung Electronics at the end of March, a stake valued at $5.2 billion.
Sell or Sue
Should the stake be sold for less than 700,000 won per share, or 2.45 trillion won, 30 Samsung Group companies must shoulder the shortfall, according to the agreement with creditors. Negotiations with Newbridge to buy the stake faltered earlier this year.
``If we fail to sell the stake by the targeted date, we will take legal action against Samsung Group to recoup our money,'' Seoul Guarantee's Kwon said.
Merrill Lynch & Co. the world's No. 2 securities firm by market value, is arranging the sale. R.G. Ross, Merrill's Hong Kong-based spokesman for Asia, said he couldn't comment until after he checks the Korean media report.
To contact the reporter on this story:
Sangim Han in Seoul at sihan@bloomberg.net
Last Updated: May 17, 2005 06:10 EDT
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