South Korea’s food making conglomerate Dongwon Group is speeding up the process to sell non-core businesses of Dongbu Express, the country’s third largest logistics company which the group acquired in February this year.

According to sources from the investment banking industry on Sunday, Dongwon Industries Co. and the sales advisors Korea Investment & Securities Co. and Ernest & Young recently sent information memorandum (IM) to 30 or more prospective investors including private equity funds and strategic investors to sell an 11.11 percent stake in Seoul Express Bus Terminal Co. owned by Dongu Express and its express bus operation Dongbu Bus, car rental business Dongbu Rent-a-car, and taxi-hailing business Dongbu NTS.

Market analysts estimate the total sales price would reach above 200 billion won ($175.1 million). They plan to conduct a preliminary auction on April 25 and main bid in early June with an aim to complete the sale by the end of June.

Dongwon prefers to sell the whole non-core business units of Dongbu Express to one buyer, but it is also open to a plan to sell off the businesses in splinters as part of efforts to accelerate the sale in fear of a further deterioration of its financial health. It had already decided to put up the non-logistics businesses of Dongbu Express for sale when it bought a full stake in the logistics firm for 416.2 billion won in February. The group raised most fund for the takeover deal by taking out loans and issuing debts.

The nation’s car rental business operators such as SK Networks Co. are reportedly interested in Dongbu Rent-a-car, while bus service providers and private equity funds including Keystone Private Equity are showing a will to buy Dongbu Bus.

The total asset size of Dongbu Express’ non-logistics businesses comes at 124 billion won. They recorded 7 billion won in operating profit on sales of 114.5 billion won last year. Their earnings before interest, tax, depreciation and amortization (EBITDA) amounted to 21.2 billion won.

Its bus operating business is generating stable profits and boasts ample liquidity. It accounts for the largest market share in bus operation in Gangwon Province.

It is highly likely that Seoul Express Bus Terminal’s largest shareholder Central City Inc., Shinsegae Group’s bus operating unit holding a 64.96 percent stake in the firm, would buy its 11.11 percent stake put up for sale, according to sources.

By Kang Doo-soon and Chun Gyung-woon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]