Jungheung interested in Daewoo E&C, but takeover still under review

Jungheung Group, a local construction company, has expressed interest in acquiring Daewoo Engineering and Construction, but is in the process of reviewing its value and business potential, the builder said Friday.

”The company is interested in acquiring Daewoo E&C but nothing is confirmed,” an official at Jungheung said.

“We’ll carefully examine the various conditions including Daewoo’s domestic and overseas business status, prospects after the acquisition and pricing,” the official said.

The statement came after reports emerged that Jungheung had submitted a letter of intent to participate in the bid.

Market observers say the current value of the controlling stake in Daewoo E&C is estimated between 1.5 trillion won ($1.3 billion) to 2 trillion won.

Daewoo E&C, formerly owned by the now-defunct Daewoo Group and later by Kumho Asiana Group, has been put on sale for years.

KDB Investment, a key creditor of Kumho Asiana Group, took over the controlling 50.75 percent stake in Daewoo E&C in 2010 to help the debt-ridden conglomerate restructure its finances. Kumho Asiana acquired Daewoo E&C in 2006.

Jungheung, the country’s 47th largest local construction company based in Gwangju, was holding total assets worth 9.2 trillion won as of 2020, according to the Korea Fair Trade Commission.

Other contenders for Daewoo E&C are said to be consortiums mostly led by private equity funds, according to media reports. Most recently, Abu Dhabi Investment Authority, a sovereign wealth fund owned by the Emirate of Abu Dhabi, has also reportedly shown interest in Daewoo E&C.

Daewoo E&C recorded a revenue of 1.93 trillion won with an operating profit of 229 billion won in the first quarter this year. Its net profit during the same period was 147.9 billion won, up 138.9 percent from a year ago.

By Park Ga-young (gypark@heraldcorp.com)