CJ Group claims Samsung affiliates conspired to acquire Korea Express; Lotte gives up on bid
CJ Group said it will retaliate against what it claimed was Samsung Group’s deliberate act of betrayal regarding the bidding for Korea Express, the nation’s top logistics company.
CJ is to take legal action against Samsung Securities for breaking off a sales advisory contract after being privy to critical information regarding the bidding, in which Samsung SDS, an affiliate to the brokerage, is participating.
“We don’t know exactly when we will be filing the suit, but we certainly will be making the move sometime in the future,” said a CJ Group spokeswoman.
(From left) CJ Group chairman Lee Jae-hyun, Samsung SDS CEO Koh Soon-dong
Samsung Securities terminated the contract with CJ on June 23, citing a clash of interest as its affiliate would be in the competition.
CJ Group spokespeople on Monday said Samsung was “fooling no one.”
“Samsung Securities has possession of all critical and classified information in regard to the bidding, including the price we planned to offer. There is a very big possibility that this information would be relayed to Samsung SDS,” the group said.
The company added that the timing was suspicious, as Monday was the deadline for the bidding, meaning Samsung Securities had pulled out with less than a week to go for the final showdown.
Adding salt to CJ’s wounds is the fact that Chairman Lee Jay-hyun’s cousin is Lee Jae-yong, president of Samsung Electronics and heir to Samsung Group.
Industry sources said the CJ chief had privately requested his cousin’s support to help CJ acquire Korea Express.
Samsung SDS last week stated that it would be joining a consortium led by POSCO, the world’s fourth-largest steelmaker, for a 5 percent stake in the logistics company.
Korea Express had been on the selling block since December last year since its embattled parent Kumho Asiana Group decided to trim its size.
Conglomerates, many looking to cut logistics costs and widen their profit margins by adding logistic arms handling their own goods, showed keen interest.
CJ and the POSCO-Samsung SDS consortium tendered bids by Monday’s deadline. Lotte unexpectedly did not submit a bid.
POSCO, if successful in the bid, would walk away with a more than 30 percent stake.
POSCO has said it wants Korea Express for the purpose of creating a global logistics company.
CJ Group officials, however questioned the synergy effect Samsung SDS and POSCO said they would have, as CJ has more logistics expertise than the two put together.
“It would hardly be a global logistics facility if the company is going to be focusing on delivering its own goods to cut costs and raise revenue,” said the CJ spokeswoman.
CJ currently operates a logistics arm, CJ GLS, which largely handles non-CJ products.
Officials also asked why Samsung SDS is obsessed with gaining a stake that comes far short of offering it managerial rights.
Industry sources zeroed in on the fact that the Lee Jae-yong is a stakeholder in SDS,
Lee holds an 8.81 percent stake, while his sisters Lee Boo-jin, head of Hotel Shilla and Lee Seo-hyun, vice president of Cheil Industries, each hold 4.18 percent stakes.
The siblings would subsequently need more ammunition to obtain managerial rights in the affiliate, industry experts noted.
By Kim Ji-hyun (email@example.com