POSCO and GS Group forming a consortium to bid for Daewoo
POSCO and GS Group, rival South Korean bidders for Daewoo Shipbuilding & Marine Engineering , said on Thursday they would team up in the race to buy the world's No. 3 shipbuilder.
POSCO, the world's fourth-largest steelmaker, and GS Holdings , the holding company for energy-to-construction group GS, said in separate
statements they were forming a consortium to bid for Daewoo.
A 50.4 percent stake in Daewoo is being sold by top shareholders including Korea Development Bank.
"Forming a consortium will help secure medium- and long-term foreign funds," POSCO said in a statement, adding it and GS are in talks with a European bank and Middle East investors, respectively, to raise funds.
Daewoo was initially expected to fetch as much as $8 billion, but a 63 percent fall in the company's share price so far this year has seen the anticipated deal value slump to $4 billion-$5 billion at best.
Combining both steel making and energy businesses with shipbuilding would also increase benefits of the deal, POSCO said.
The tie-up could give POSCO-GS advantage over other bidders, Hanwha Group and Hyundai Heavy Industries.
Cash-rich POSCO had been considered as a strong candidate even alone but some analysts had been skeptical about benefits from a steel-shipbuilder combination.