이 기사는 2021년 06월 29일 07시50분 thebell에 표출된 기사입니다

The race to acquire Daewoo Engineering & Construction (Daewoo E&C) has become a two-way battle between Jungheung, a mid-sized construction firm, and a consortium led by real estate developer DS Networks, as Hoban Construction withdrew.

Jungheung and the DS Networks-led consortium, which includes SkyLake Equity Partners and IPM Group, submitted binding bids for a 50.75% stake in Daewoo E&C held by KDB Investment on Friday, industry sources said.

Korea Development Bank (KDB)’s mergers and acquisitions division and BoA Securities are managing the sale process. The two bidders are set to pay a minimum deposit of 50 billion won ($44.3 million) upfront to guarantee that they are committed to the purchase, as requested by the seller prior to the bidding.

“The seller (KDB Investment and deal managers) apparently made it clear that they consider the certainty of the deal closing the most important factor in choosing the preferred buyer,” an industry insider said, adding that paying a greater deposit could give one bidder an edge over another by showing a stronger intention to acquire the target.

Hoban Construction decided not to submit a bid, probably because it needed to offer a bid much higher than competing bidders in order to win the race, after the company called off its planned acquisition of Daewoo E&C at the last minute in 2018.

“(Hoban) would have had to submit a much higher bid in order to make KDB believe that it won’t pull out of the deal this time, and that appears to be the reason that Hoban eventually withdrew,” the industry insider said.

The bids submitted by Jungheung and the DS Network consortium are expected to be little different, making how much they will pay for a deposit a more important factor in selecting the preferred bidder.

The bidders have been carrying out due diligence for the past few weeks, with a focus on Daewoo E&C’s overseas business. Three years ago, Hoban dropped its deal because Daewoo E&C revealed losses on its overseas projects after it was named as the preferred buyer.

“There were challenges involved in conducting due diligence as on-site visits are practically impossible due to the impact of the Covid-19 pandemic. The bidders may want to use that as leverage in negotiations with the seller,” said another industry insider. (Reporting by Seon-young Kim)