Hanwha Selected as Preferred Bidder for Daewoo Engineering

The Hanwha Group was chosen yesterday as the preferred bidder for Daewoo Shipbuilding and Marine Engineering.

If Hanwha concludes price negotiations and gets final approval to purchase the shipbuilder, it will become Korea’s ninth-largest conglomerate in assets, up from 12th. Privatized companies that once belonged to the government including POSCO were also considered among potential buyers.

The Korea Development Bank, which has the largest share in Daewoo and is arranging the sale, said it chose Hanwha after considering the bid, management capability, financing plan and development vision for the shipbuilder.

The bank’s vice governor Jeong In-seong said, “Hanwha’s bid exceeded our target price,” but declined to disclose the price.

Sources close to the bid said Hanwha probably bid 6.5 trillion won (4.5 billion dollars), far higher than that of Hyundai Heavy Industries.

The bank will sign a memorandum of understanding with Hanwha in ten days, after which the business group will conduct a due diligence on the shipbuilder for three to four weeks from early next month. Hanwha will then negotiate on price and sign a final contract by the end of this year.

jinhup@donga.com jaeyuna@donga.com