August 26, 2008
Hyundai Heavy to bid for Daewoo Shipbuilding
Korea's Hyundai Heavy Industries Co., the world's largest shipbuilder, today revealed that it plans to bid for a controlling stake in Daewoo Shipbuilding & Marine Engineering Co.. the world's number three.
According to agency reports, Hyundai will submit a letter to express its interest by a Wednesday deadline.
The state-owned Korea Development Bank (KDB) and a government agency, the Korea Asset Management Corp., are selling their combined 50.4 percent holding in Daewoo Shipbuilding in a move related to KDB's own privatization plan.
The sale is expected to fetch around $8 billion.
Meantime, the Korea Herald reports that abundant cash reserves may be a key factor in deciding which bidder will succeed.
Korea's top financial regulator, Jun Kwang-woo, chairman of the Financial Services Commission, yesterday said that companies should not borrow excessively in order to buy Daewoo Shipbuilding.
"If a company buys Daewoo Shipbuilding on an excessively high level of leverage, it would not only hurt the company's financial health, but the market's liquidity level overall and would make it harder for the authorities to control prices," the Korea Herald quotes him as saying.
Prior to Hyundai Heavy expressing its interest, the other most-mentioned likely buyers for Daewoo Shipbuilding have been steelmaker POSCO, the GS Group and the Hanwha Group. Another potential bidder, Doosan Group, has dropped out.
The Daewoo Shipbuilding sale will be Korea's largest ever take-over deal.