이 기사는 2021년 07월 07일 07시43분 thebell에 표출된 기사입니다

Mid-sized construction firm Jungheung is set to become the new owner of bigger peer Daewoo E&C, beating out a competing bid from real estate developer DS Networks.

KDB Investment, the investment arm of state-controlled Korea Development Bank (KDB), named Jungheung as the preferred buyer for its 50.75% stake in Daewoo E&C on Monday.

Jungheung made a final offer of 2.1 trillion won ($1.85 billion) last Friday, while a consortium led by DS Networks offered a final bid of 2 trillion won, according to sources.

In an earlier round of bidding held about a dozen days ago, Jungheung submitted an offer of 2.3 trillion won, or 11,000 won per share representing a 28% premium to the previous day’s closing price. It also reportedly included an indemnity clause to protect itself from potential risks from contingent liabilities related to Daewoo E&C’s overseas business.

The DS Networks-led consortium, which includes SkyLake Equity Partners, reportedly made a first offer of 1.8 trillion won, which was 500 billion won less than the bid from Jungheung, without an indemnity clause.

As concerns about overvaluation grew, Jungheung lowered its bid to 2.1 trillion won and instead removed the indemnity clause. The DS Networks consortium, on the other hand, raised its bid to 2 trillion won and inserted the indemnity clause.

There was no big difference in the two final bids. But KDB Investment supported Jungheung, apparently because of its offer didn’t include indemnity terms. In early 2018, Hoban Construction was named as the preferred buyer for Daewoo E&C but called off the acquisition at the last minute due to concerns about potential losses from the target’s overseas projects.

Jungheung and KDB Investment is said to have agreed on the price adjustment range of 3%, meaning the final acquisition price will be no less than 2.04 trillion won even if additional information is revealed about contingent liabilities related to Daewoo E&C’s overseas construction projects.

KDB’s mergers and acquisitions division and BoA-Merrill Lynch are advising KDB Investment on the sale. (Reporting by Seon-young Kim)