LG to secure war chest prior to Hanaro takeover bid

South Korea’s LG Group [03550.KS] has said it is in talks with foreign investors in a bid to raise more than USD500 million, which it will use to take control of the country’s struggling service provider Hanaro Telecom [Nasdaq: HANA]. LG, which is keen to merge Hanaro’s extensive broadband internet operations with its own underperforming LG Telecom [32640.KQ], Dacom [KSE: 15940] and Powercomm units, already has an 18% stake in Hanaro. It said yesterday it was confident of securing the financial backing from the as-yet unnamed overseas investors, which it needs to scupper the USD500 million bid for a near 40% stake in Hanaro tabled last week by the AIG-Newbridge consortium. LG said it would oppose the AIG bid at Hanaro’s shareholder meeting next month and remains confident of securing the requisite two-thirds approval from Hanaro’s shareholders for its own takeover proposals. Analysts believe the outcome of LG’s bid will prove crucial to the future of its telecoms operations, which have been struggling in the face of stiff competition from the likes of SK Telecom [NYSE: SKM]. SK Telecom is also a shareholder in Hanaro and is expected to oppose LG’s move to gain control of the operator.