South Korea Prepares to Auction Daewoo Engineering and Construction

Strategic Insights -

South Korea is poised to launch the auction of Daewoo Engineering and Construction, a key part of the bankrupt Daewoo business empire. The Korea Asset Management Company (Kamco), Daewoo's main creditor, plans to appoint an adviser to sell its 46% stake in Daewoo Engineering to a domestic or foreign investor. The company has made a successful recovery, doubling its net profits to 250 billion won last year, and analysts expect several companies to compete for the mandate to sell it.

Key Takeaways:

  • The Korea Asset Management Company (Kamco) plans to appoint an adviser to sell its 46% stake in Daewoo Engineering to a domestic or foreign investor.
  • Daewoo Engineering has made a successful recovery, doubling its net profits to 250 billion won last year.
  • The company's market capitalization on the Seoul stock exchange stood at 1.741 trillion won yesterday.
  • Analysts expect several companies to compete for the mandate to sell Daewoo Engineering, which includes rival engineering and construction companies and private equity funds from both South Korea and overseas.
  • Kamco, which played a leading role in South Korea's recovery from financial crisis, plans to auction off several other Daewoo units, including Daewoo Shipbuilding & Marine Engineering, Daewoo Precision Industries, and Daewoo Securities.
  • General Motors paid $400 million for part of Daewoo Motor in 2002, and Credit Suisse First Boston was appointed by Kamco last year to find a buyer for Daewoo Heavy Industries & Machinery.
  • Daewoo Engineering's stake is expected to fetch around 800 billion won ($677 million), according to analysts.

Statistics:

  • Daewoo Engineering's market capitalization: 1.741 trillion won
  • Daewoo Engineering's net profits last year: 250 billion won
  • Amount expected to be fetched by Daewoo Engineering's stake: 800 billion won ($677 million)
  • Value of General Motors' purchase of part of Daewoo Motor in 2002: $400 million
  • Number of Daewoo units expected to be auctioned by Kamco: 4 (Daewoo Shipbuilding & Marine Engineering, Daewoo Precision Industries, Daewoo Securities, and Daewoo Heavy Industries & Machinery)

Sources:

  • [The Financial Times, January 17]
  • [The Korea Times, January 10]
  • [Korea Asset Management Company, press release, January 2004]
  • [General Motors, press release, January 2002]
  • [Credit Suisse First Boston, press release, January 2003]