Hanwha picked as prime bidder for Daewoo Shipbuilding

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SEOUL, Oct. 24 (Yonhap) -- South Korea's state-run lender Korea Development Bank
(KDB) said Friday it picked chemical and energy-focused Hanwha Group as a
preferred bidder for Daewoo Shipbuilding & Marine Engineering Co.
KDB plans to sign a final deal with Hanwha to sell the world's third-largest
shipyard within the year, after a three or four-week due diligence on the
shipbuilder starting early November, it said in a statement.
The lender did not reveal the bidding price, but some market analysts estimate
the value of the stake at over US$5 billion.
Hanwha and Hyundai Heavy Industries Co., the world's leading shipyard, had vied
for buying a 50.37 percent stake in Daewoo Shipbuilding after KDB disqualified
POSCO as a potential buyer on Oct. 16, taking issue with its qualifications.
POSCO formed a consortium with GS Group, an energy and construction conglomerate,
to make a joint bid for the controlling stake, but the group backed out at the
eleventh hour, rendering the steel giant ineligible.
Daewoo Shipbuilding & Marine Engineering was placed under a debt workout program
in August 1999 after its parent Daewoo Group collapsed under heavy debts.
Shares of the shipbuilder tumbled by the daily limit of 15 percent to 11,000 won
($7.62) on the main bourse with a market capitalization of 2.1 trillion won.
Should the deal be successfully completed, Hanwha will emerge as the country's
ninth-largest conglomerate with assets of 29.7 trillion won.
Also, Hanwha will be able to expand its energy and construction businesses as
demand surges for deep-sea drilling and production.
But shares of Hanwha Corp., the de facto holding company of the business group,
fell the daily 15-percent limit on concerns that the group could face difficulty
in raising acquisition costs amid the worldwide credit crunch and that the high
price could weigh on its financial status.
The deal, which amounts to this year's largest, comes amid concerns that the
shipbuilding industry is considered highly vulnerable to the global economic
downturn.
sam@yna.co.kr
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