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Doosan Solus sale draws few bidders Many potential investors ultimately made no offer

Translated by Ryu Ho-joung 공개 2020-06-05 08:00:14

이 기사는 2020년 06월 05일 08:00 더벨 유료페이지에 표출된 기사입니다.

South Korea's Doosan Group has failed to attract sufficient bidders to proceed with an auction process for Doosan Solus, putting the conglomerate urgently in need of liquidity under increased pressure.

The first round of bidding for Doosan Solus, a copper foil maker, took place on June 2 but many of the potential buyers who initially showed interest in the company did not make offers, sources said. Among them are Lotte Chemical, which is one of the major chemical companies in the country, and several global private equity firms.

This was an expected result to some extent, industry watchers said. Doosan Group originally had held private negotiations with SkyLake Investment about the sale, but the talks flopped as they couldn’t come to an agreement over the company’s valuation. After receiving sufficient interest from potential buyers, Doosan Group decided to sell the company through an auction.

But a valuation gap remained an obstacle. The seller was reportedly seeking a 1.5 trillion won ($1.23 billion) valuation while most of the prospective buyers valued Doosan Solus at under 1 trillion won. SkyLake is also said to have put the company’s value at around half the price proposed by the seller.

Indeed many of the potential buyers who weighed up whether to join the bidding were not so aggressive in acquiring the company. It was also partly because the sale was part of the conglomerate’s restructuring plan, a situation where typically the buyer’s power is high.

“[Doosan Solus] was placed on the market in what could be considered a fire sale, and yet the seller put a high price tag on it,” said an official from one of the potential buyers. “We studied the company but couldn’t find enough factors to justify such a high price.”

“Doosan Group appeared to be unwilling to lower its valuation of Doosan Solus with little room for negotiation,” an industry insider said.

A lack of communication between Doosan Group and potential investors also resulted in a lukewarm response to the planned sale of the conglomerate’s hydraulic component manufacturer, Doosan Corporation Mottrol.

Several potential buyers including private equity firms reportedly submitted bids for Doosan Corporation Mottrol in the first round of bidding last week. But the seller is still open to offers for the business, indicating that few investors joined the bidding than expected.

(Reporting by Hee-yeon Han)
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