KDB fails to attract foreign companies to Daewoo E&C takeover bid

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KDB fails to attract foreign companies to Daewoo E&C takeover bid

Headquarters of Daewoo Engineering & Construction (Daewoo E&C) in Seoul.  Courtesy of Daewoo E&C
Headquarters of Daewoo Engineering & Construction (Daewoo E&C) in Seoul. Courtesy of Daewoo E&C

By Park Jae-hyuk

Jungheung Construction and a consortium made up of real estate developer DS Networks, local private equity firm (PEF) SkyLake Equity Partners and infrastructure investor IPM became the only two participants in the final offer to acquire a stake. majority stake in Daewoo Engineering & Construction (Daewoo E&C) of KDB Investment, a subsidiary of the state-run Korea Development Bank (KDB), industry and media sources said on Friday.

Hoban Construction had previously indicated its intention to participate in the bid, but ultimately stayed out of the competition.

Potential foreign buyers – the Abu Dhabi Investment Authority, one of the Middle East’s largest sovereign wealth funds, and China State Construction Engineering have also decided not to bid for Daewoo E&C, turning the race for the Korean automaker into one national competition.

Hahn & Company and IMM Private Equity dropped out earlier, although PEFs have revised their participation in the offer.

The 50.75% stake in Daewoo E&C listed for sale is valued at around 2,000 billion won (US $ 1.7 billion), as KDB Investment reportedly set the minimum purchase price at 9,500 won per share. Daewoo E&C stock price closed at 8,660 won on Friday, up 0.46% from the previous session.

Right now the seller and the bidders have kept a low profile.

The underwriters of the transaction are the M&A department of KDB and Bank of America Merrill Lynch.

They are expected to select the preferred bidder next week to finalize the sale during this year.

Daewoo E&C has been on sale several times over the past decade.

It was sold to Kumho in 2006 after the breakup of the Daewoo Group, but Kumho put the builder back on sale in 2009 due to financial difficulties. It was eventually sold to KDB in 2010 as other Korean conglomerates were reluctant to buy the automaker during the global financial crisis.

The state bank’s previous attempt to sell the builder in 2017 failed as Hoban Construction, which had been selected as the preferred bidder, abandoned the deal after realizing Daewoo E&C’s large-scale loss of the power plant project. power plant from Safi in Morocco. .

In 2019, KDB sold its stake in Daewoo E&C to its subsidiary KDB Investment.

Market watchers consider this year a good time to sell the construction company, given that its first quarter operating and net profits rose 89.7% and 138.9% year-on-year, respectively.

However, the Daewoo E&C union strongly protested against KDB Investment’s latest attempt to sell its stake, criticizing that the exit strategy was rushed through.

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