S.Korea Lotte joins race for Daewoo Int'l - source

South Korea's retail-focused Lotte Group has joined the race to buy a controlling $2.1 billion stake in Daewoo International, competing against cash-flush POSCO, a Lotte source said on Thursday. Lotte is an unexpected bidder for trading and resource development firm Daewoo, which steelmaker POSCO has long sought.
Shares in flagship Lotte Shopping, the country's No. 2 retailer, fell on the news, but the impact on the overall Lotte Group was limited as analysts played down the possibility of an acquisition.
POSCO is considered having a lead in the race for Daewoo, which ships its steel products and also trades iron ore and base metals. With ample cash, POSCO is looking at Daewoo's energy and resource development business to expand through the supply chain and close the gap on acquisitive Chinese steel mills.
"Taking into account what Lotte could get out of this potential deal, and comparing to what other bidders like POSCO could get out from it, there is very low likelihood of Lotte actually ending up buying the Daewoo International stake," said Kim Kyeong-ki, an analyst at Hanwha Securities.
"POSCO probably has more cash to bid higher price anyways."
State-run Korea Asset Management Corp said several contenders handed in letters of intent for Daewoo by Wednesday's deadline, including steelmaker POSCO, but declined to identify other participants. [nTOE61M01K]
A Lotte source, who declined to be identified, said on Thursday the group submitted a letter of intent for Daewoo International, confirming an earlier newspaper report.
Nine local financial institutions are offering to sell between 50 percent plus one share to their entire 68 percent holding in Daewoo, formerly a unit of failed Daewoo Group.
By 0120 GMT, Lotte Shopping shares fell 1.41 percent and POSCO was down 0.37 percent. Daewoo International shares rose 0.14 percent in the wider market that fell 0.54 percent.