GS E&C, the largest shareholder of Parnas Hotel, is reportedly considering selling its shares to GS Homeshopping, instead of the current preferred bidder GS Retail.
The move comes as GS Retail has allegedly been reluctant to seal the 800 billion won ($737 million) deal for fear of being accused of breach of conduct by its own shareholders, a local business newspaper reported.
According to the report and market analysts, GS Homeshopping, the TV shopping unit led by GS chairman Huh Chang-soo’s younger brother Huh Tae-soo, emerged as the replacement for GS Retail as the sales of Parnas Hotel hit a snag.
GS Retail has not given an exact timeline for the acquisition of GS E&C’s 67.56 percent stake, and the field test is pending at the management stage. “The GS Retail management fears shareholders’ accusation of breach of conduct because some suggest that the Parnas Hotel valuation have been inflated,” the newspaper quoted an insider as saying.
GS Retail faces additional burdens with its recent failure in business ventures including the Mister Donut franchise as well as needing 300 billion won in cash for the acquisition, the newspaper reported.
But for GS E&C, the money is expected to be the shot in the arm it needs after being hit hard by the recent economic slowdown and overseas business fluctuation. “The TV shopping company has emerged as a contender for the hotel business because GS management clearly wants to have the hotel under its wing,” another source said.
A GS E&C spokesman declined to confirm the report. “There are minor hiccups, but I am sure we will reach an agreement,” he told The Korea Herald.
Parnas Hotel runs two five-star hotels ― Grand InterContinental Parnas and InterContinental Seoul Coex ― in the affluent district of Samseong-dong in southern Seoul. The company, valued at 750 billion won-800 billion won, was put on the market last year.
The company called IMM Private Equity as the initial preferred bidder but opted for its sister company GS Retail in February. Insiders said the management had a change of heart after real estate prices in Samseong-dong skyrocketed when Hyundai Motor Group decided to pay over 10 trillion won to acquire the nearby Korea Electric Power Corporation headquarters building last year, and Seoul City pledged to create a comprehensive business-tourism cluster there.
By Bae Ji-sook (baejisook@heraldcorp.com)
