Kumho Wins Bid for Daewoo Engineering and Construction

Daewoo suffered greatly from the IMF Crisis or 1997. Even nearly a decade later parts of the once powerful group are still be acquired. This includes Daewoo Engineering and Construction.

Korea Times notes...
Kumho Asiana Group was picked as a preferred bidder to take over a controlling stake in Daewoo Engineering & Construction, according to Korea Asset Management Corp. (KAMCO), the largest shareholder of the builder.

Kumho will become the nationÂ’s eighth largest conglomerate once the acquisition is completed as planned. Daewoo has been one of the most coveted items in the local mergers and acquisitions (M&A) market this year.

With the acquisition, Kumho will rise as not only a top builder. Currently the nation’s 11th largest conglomerate with 12.98 trillion won in assets, Kumho Asiana Group will have the eighth largest assets among domestic conglomerates. Having started business with two taxis back in 1946, Kumho has 23 companies under its wing, ranging from airlines and tire companies to chemistry firms and life insurance companies. The group is also planning to acquire Korea Express, under its plan to be a powerhouse in construction and transportation.

Among the five consortiums that bid for Daewoo, Kumho is known to have offered the highest bid price of 6.6 trillion won for the entire 72.1 percent stake held by DaewooÂ’s creditors. Price is the most important factor in choosing the preferred bidder. The other four consortiums were led by Doosan Group, real estate developer Prime Group, construction conglomerate Samhwan Group and Eugene Group, a cement and confectionery producer.

Prime Group, which offered 6.1 trillion won, was designated as a secondary preferred bidder. Daewoo’s labor union was supporting the Prime consortium. Doosan Group, which offered 6.4 trillion won, is known to have been hit by the charges of alleged embezzlement and accounting fraud by its top managers last year. Morality is another factor in choosing the bidder.

After signing memorandum of understanding by the end of June, Kumho plans to sign for final agreement in August after a due diligence study on Daewoo.