POSCO, Hyundai Heavy in bidding for Daewoo shipyard


Normal 0 21 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Normál táblázat"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} Steelmaker POSCO and Hyundai Heavy Industries officially expressed interest Wednesday in acquiring a majority stake in world No. 3 shipyard Daewoo Shipbuilding & Marine Engineering estimated at up to $8 billion.

The deal has drawn heavy attention from both domestic and foreign investors, although foreign buyers are largely excluded from bidding due to Daewoo’s involvement in the defense industry. The sale will likely generate substantial advisory fee income for global bankers, such as Merrill Lynch and Morgan Stanley, as the bidding groups move aggressively to win Daewoo at a time when the global flow of M&A has been slowing.

The successful buyer could secure a new growth engine from the lucrative energy-related business and strong cash flows of the shipbuilder. Cash-rich POSCO and Hyundai Heavy are seen as particularly strong contenders as the government has cautioned against debt-laden purchases. Energy- and construction-focused GS Group and Hanwha Group, led by chemicals maker Hanwha Corp also handed in letters of intent to buy the shipbuilder, a GS official and a source close to Hanwha said by telephone.

State-owned Korea Development Bank (KDB) and a government agency have put up for sale their combined 50.4% stake in Daewoo Shipbuilding, in a deal expected to bring in more than double its current market price due to the heated competition. Despite expectations of a hefty M&A premium, some investors are waiting for the first inkling of the actual bidding prices for the shipbuilder.

Some analysts are concerned about the high premium building on Daewoo as the global credit crunch raises borrowing costs. The government has called on companies to refrain from financing M&A deals with heavy debt.

KDB will screen parties that submitted letters of intent in the next one or two days and weed out disqualified bidders. Preliminary bids will be received in September and final bids in October, before a preferred buyer is picked in October, KDB had said.

POSCO expects a purchase of Daewoo to help it secure future demand, protect against possible ship plate oversupply and improve diversification. For the world’s top shipbuilder Hyundai Heavy, a possible acquisition of the smaller rival would reduce the number of its competitors and help consolidate the sector.

Daewoo Shipbuilding shares ended up 1.87% at 35,350 won. The stock has slid 46% since a its mid-October 2007 peak on worries over the slowing global economy and rising steel prices, leading to a wide gap between the anticipated deal price and the market price. (Reuters)

Opportunity in Domestic Cultivation of Berries Crops

Opportunity in Domestic Cultivation of Berries

Hungary Urges European Space Research Strategy EU

Hungary Urges European Space Research Strategy

Hungary's Largest Speculative Industrial Property Nearing Co... Logistics

Hungary's Largest Speculative Industrial Property Nearing Co...

White Party at The Duchess Coming This Weekend Drinks

White Party at The Duchess Coming This Weekend


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.