Korean steel giant POSCO will take over Daewoo International Corp., the Public Fund Oversight Committee said Friday.
The committee held a general meeting at Korea Deposit Insurance Corp. and picked POSCO as the preferred bidder for Daewoo. If the sale goes through as expected, it will be Koreas largest acquisition since the global financial crisis began in 2008.
POSCO offered 3.45 trillion won (three billion U.S. dollars) to buy a 68.1-percent stake, more than the Lotte Group`s tender of 3.2 trillion won (2.8 billion dollars). The committee also preferred POSCO in non-price areas such as financing and management capability.
A committee member said, Lotte announced that it will form a consortium with financial companies, while POSCO said it will raise funds on its own. This difference worked to POSCO`s advantage. Committee members had no difference of opinion.
The sale also raises expectations that large corporations will spend more aggressively amid economic recovery in Korea.
A Financial Services Commission official said, This case is exemplary since large Korean corporations, not a private equity fund or unreliable foreign capital, voluntarily took part in the bidding. The competition was also not overheated.
If the sale of Daewoo International is completed as scheduled, the process to sell Daewoo Shipbuilding and Marine Engineering and Hyundai Engineering and Construction will be accelerated.
Korea Asset Management Corp., the largest shareholder of Daewoo International, will sign a memorandum of understanding next week and sign a formal contract in July after due diligence and negotiations over price. By selling its stake in Daewoo International, the asset management company will recoup public funds worth 1.8 trillion won (1.6 billion dollars).
If public funds collected via the sale of Daewoo Shipbuilding and Marine Engineering are combined, the asset management company, which invested three trillion won (2.6 billion dollars) in Daewoo International, can collect 7.8 trillion won (6.8 billion dollars).