SEOUL, South Korea-Hanaro Telecom Inc., South Korea’s second-largest broadband and fixed-line carrier, announced it would take over its rival Korea Thrunet Co., signaling a major change in the fast-evolving high-speed Internet access market.
Hanaro held a board of directors’ meeting early Monday and finalized the plan to purchase a controlling stake in Thrunet from TriGem Computer Inc. and other major shareholders.
Under the deal, Hanaro has agreed to purchase a 71.95-percent stake in Thrunet, valued at some 125.9 billion won.
Trigem Computer owns about 32 percent of Thrunet as the largest shareholder. Other shareholders include Naray & Co., chipmaker Hynix Semiconductor Inc., U.S.-based software giant Microsoft Corp., and Hyundai Heavy industries Co.
The company said it will acquire 55.86 million shares for 2,253 won per share. Thrunet’s total shares outstanding are numbered at 77.63 million.
Hanaro said it will acquire a 32-percent stake, or 24.65 million shares, by Jan. 3 and the remaining 40.2-percent stake, or 31.21 million shares, by Feb. 7.
Hanaro said it will issue convertible bonds to execute the takeover transaction. Hanaro shareholders will get 1.43 Thrunet shares for each Hanaro share they hold.
Hanaro said it will conduct a month-long due diligence starting from tomorrow, whose result might revise the purchase value of Thrunet.
The company said it expects to create synergistic effect valued at 622 billion won by the end of 2007 by jacking up its market share and revenue, reducing overlapping investment and trimming costs for retaining subscribers after the takeover of Thrunet is successfully completed.
As of the end of November, Hanaro has 2.89 million subscribers, carving out a 28.1-percent market share in the broadband access service sector, while Thrunet has 1.3 million users, which amounts to 12.7-percent market share. Hanaro also controls a 32-percent stake in Dreamline, a small Internet access provider which has 170,000 subscribers, or a 1.7-percent market share. All in all, Hanaro’s combined market share will shoot up to 42.5 percent after the takeover, posing a threat to No. 1 player KT Corp. which has a 46.7-percent market share.
