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Hoban Construction may bid for Daewoo E&C three years after it withdrew from the planned acquisition of its bigger rival from Korea Development Bank (KDB) at the last minute.

The construction firm based in Jeolla Province is considering whether to participate in the bidding scheduled for Friday, industry sources said. The firm reportedly recently approached KDB Investment, the state-controlled bank’s investment arm holding a 50.75% stake in Daewoo E&C.

“It’s difficult to comment on that,” a representative for Hoban Construction said.

Industry watchers cast doubts over Hoban’s interest in acquiring Daewoo E&C, citing a collapsed deal three years ago. In early 2018, Hoban called off its planned acquisition of the company just a dozen days after being named as the preferred buyer by KDB.

Some observers said KDB might have lost trust in Hoban. After the deal fell through, it took more than three years for KDB to restart the sale process.

Hoban had its own reason to pull out of the deal. At the time, Daewoo E&C revealed a contingent liability of over 400 billion won ($352.3 million) related to its overseas projects after Hoban was chosen as the preferred buyer.

Other observers expect KDB will likely place the highest priority on the sale price. “Selling Daewoo E&C at the best possible price will be what KDB is interested in,” said an industry insider, but adding that the lender will likely prefer a bidder other than Hoban unless Hoban’s bid is much higher than those from competing bidders.

Hoban is likely to be cautious about whether to join the race. KBD Investment said in a process letter recently sent to potential buyers that after a binding offer is submitted, a 50 billion won deposit should be paid upfront to guarantee the purchase.

Daewoo E&C shares rose on expectations that competition to acquire the builder could heat up, closing up 9% at 8,950 won apiece on Tuesday.

Hoban is in a much stronger cash position compared to other two potential buyers, real estate developer DS Networks and Jungheung Construction.

Hoban had 1.74 trillion won in cash and cash equivalents (including short-term investments in securities) at the end of 2020 on a consolidated basis. Its debt ratio is relatively low at 53%.

DS Networks teamed up with SkyLake Equity Partners to jointly bid for Daewoo E&C. It had 446 billion won in in consolidated cash and cash equivalents at the end of 2020. The developer will be an anchor investor in the private equity firm’s investment vehicle raised to fund the acquisition.

Jungheung Construction had 507.3 billion won in consolidated cash and cash equivalents at the end of 2020, but restricted cash accounted for more than half of the total amount. It has sufficient ability to take on more financial leverage given a relatively low debt ratio, the company said. (Reporting by Jin-young Ko)