POSCO and Hyundai Heavy Industries Co have joined two other South Korean companies to bid for a majority stake in Daewoo Shipbuilding & Marine Engineering Co that could fetch as much as 7 trillion won (US$6.4 billion).
Four bids were made, including those from GS Group and Hanwha Group, before yesterday's 3pm deadline, according to state-controlled Korea Development Bank. The lender and Korea Asset Management Corp are selling their 50.4-percent stake, valued at 3.4 trillion won at yesterday's close, in the shipbuilding industry's biggest sale.
A stake in Daewoo, the world's third-biggest shipyard, would allow the winning company to enter offshore oil-exploration structures as soaring crude prices and depleting reserves in shallow waters increase the need for deep sea exploration and production. The winner would also benefit from Daewoo Shipbuilding's record order backlog, according to Bloomberg News.
"There is so much interest from companies wanting to move into the offshore business," Cho In Karp, analyst at Good Morning Shinhan Securities Co, said in Seoul. "That will most likely drive up the selling price."
Korea Development Bank will review the bids and select a shortlist to look through Daewoo Shipbuilding's books by early September. A preferred bidder will be named by mid-October.
Korea Development Bank and Korea Asset Management swapped Daewoo Shipbuilding's debt for equity in December 2000 after its parent Daewoo Group collapsed from mounting debts from the Asian financial crisis.
GS Group, owner of South Korea's fourth-largest builder, and Hanwha Group, which controls the country's biggest explosives maker, plan to enter the offshore business by combining their plant construction operations with Daewoo Shipbuilding's offshore-platform business.
No foreign investor bid for Daewoo Shipbuilding yesterday. It isn't "desirable" to sell the stake overseas because of the shipbuilder's defense business, Jun Kwang Woo, chairman of South Korea's Financial Services Commission.
