Posco Submits Initial Bid to Buy Stake in Daewoo International.
Posco, South Korea"s biggest steelmaker, submitted a letter of intent to buy a controlling stake in trader Daewoo International Corp. as part of an acquisition spree to benefit from the recovering global economy.
The bid was submitted today to state-controlled Korea Asset Management Corp., which is leading the sale as the largest shareholder, Pohang-based Posco said in an exchange filing, without giving details. Daewoo International has a market value of 3.7 trillion won ($3.2 billion).
Posco Chief Executive Officer Chung Joon Yang, spearheading $30 billion in overseas expansion, said last month Daewoo International was a ?top? acquisition priority. Daewoo International, which trades steel, crude oil, cement and automobile parts, is expanding in energy development and is leading a natural gas project in Myanmar.
?Since Posco is expanding into Indonesia, Thailand and India, Daewoo may help contribute to the company"s marketing efforts,? Kim Gyung Jung, an analyst with Samsung Securities Co. in Seoul, said before the bid. ?If Posco buys it at an appropriate price, I think it"s not that bad, given some synergies in terms of marketing and resources development.?
Daewoo International fell 2.5 percent to 36,850 won in Seoul trading, compared with a 1 percent loss in the benchmark Kospi index. Posco dropped 3 percent to 538,000 won. Posco"s statement was released after the market closed.
South Korea will sell at least 50 percent and one share in Daewoo International, the Public Fund Oversight Committee that oversees sales of state assets, said on Jan. 27. A 50 percent stake is valued at $1.6 billion as of closing today.
Posco and one other company submitted letters of intent to buy a controlling stake in the trader, MoneyToday reported today, citing unidentified officials familiar with the matter.
Posco, Asia"s most profitable steelmaker, last month posted the highest net income in six quarters after demand rebounded. Daewoo International handles about 20 percent of Posco"s steel product exports, Samsung"s Kim said.
In the past year, Posco"s Chung has acquired Asia Stainless Corp. in Vietnam, TaihanST Corp. in Korea, and is in talks to buy Thailand"s Thainox Stainless Pcl. The company may have its ratings cut because of acquisition plans, Moody"s Investors Service said Jan. 15.
Daewoo International, a former unit of Daewoo Group, has a 51 percent stake in the gas project in Myanmar. It was selected in December as the preferred bidder for a $1.3 billion coal- fired power plant project in Kenya and is developing resource projects in Madagascar, Australia and Uzbekistan.
Samtan Co., an affiliate of South Korea"s largest city gas distributor, didn"t submit a letter of intent for Daewoo International Corp., Ahn Dong Cheol, a spokesman at Samchully Co. said by phone today. Samtan may submit a bit, MoneyToday reported on Feb. 23, citing a person it didn"t identify. Samchully is the city gas distributor.
Samjong KPMG Advisory Inc. and Bank of America Merrill Lynch are advising on the sale, according to Korea Asset Management.