Shinhan Financial likely to be picked as preferred bidder for LG Card

Shinhan Financial Group is likely to be picked as the preferred bidder for the once-troubled LG Card which has fully recovered, a government source said Tuesday.

The forecast comes a day before the main creditor of the nation's largest credit card company, the state-run Korea Development Bank (KDB), is expected to announce the successful bidder.

Last week, three financial institutions -- Shinhan Financial Group., Hana Financial Group and the National Agricultural Cooperative Federation (NACF) -- submitted their final bids for LG Card, which creditors put up for sale after bailing it out two years ago.

The source, who declined to be identified, said Shinhan has offered the highest price plus a viable plan to strengthen the company which is known to have 9.8 million effective card holders as of 2005.

Financial insiders said Shinhan may have pledged to pay about 68,000 won (US$ 70.4) per each LG Card share, and take over at least 85 percent of 125 million shares that KDB and other creditors want to sell. The total includes stocks held by small-time investors.

This, they said, is slightly higher than the 67,500 won offered for each share by Hana, but much higher than what was offered by the state-run NACF.

"Negotiations will have to take place even if Shinhan becomes the preferred bidder, but under the present conditions, the financial group will have to pay 7.2 trillion won," said a financial expert.

If Shinhan pays this sum, it will be the highest amount of money that has changed hands to seal a merger and acquisition deal in South Korea.

The same expert said that because the difference in bids between Shinhan and Hana was small, there is a possibility that the two may be simultaneously chosen as the preferred bidders.

Seoul, Aug. 15 (Yonhap News)