A coalition of 62 construction companies known as Jungheung Group has become the third largest contractor in South Korea after completing its purchase of Daewoo Engineering & Construction (Daewoo E&C), the Business Korea website reports.
Jungheung announced yesterday that it had signed an agreement to acquire a 50.75% stake in Daewoo E&C. The shares had been held by the Korea Development Bank. The deal comes five months after Jungheung was selected as the preferred bidder in July.
The company said it will retain all of Daewoo’s staff, and will not interfere in its management decisions. It added that it will focus on improving Daewoo E&C’s balance sheet and promoting the smooth operations of its foreign projects.
Jung Chang-sun, chair and founder of Jungheung Group, signed the deal at a ceremony held at the Four Seasons Hotel in Seoul. He praised Daewoo E&C’s “outstanding construction expertise and vast experience” in overseas construction projects.
Jungheung initially offered just short of $2bn for the shares, but later lowered this to $1.7bn after it became aware its bid was more than $400m higher than the second-placed bidder.
The bank had been forced to accept its shareholding in lieu of debt repayments after an acquisition attempt by the Kumho Asiana Group, which was derailed by the 2008 financial crash.
The bank had been looking for an opportunity to sell its holding, and was understood to want to realise around $2bn from the deal (see further reading).
The deal will make Jungheung Group a major player in the international construction market. The company, based in the city of Naju, was established in 1983 and has specialised in the residential and infrastructure sectors.