By Kim Tae-gyu
Staff Reporter

The state-run Korea Development Bank (KDB) has come under criticism for its continual failures in attempts to take over companies or dispose of others during the past year.

\Under the stewardship of Chief Executive Min Euoo-sung, who took the reins of the development bank in June last year, the KDB has tried a series of merger and acquisition (M&A) deals to little avail.

This has irritated some critics, who contend that the KDB has been too complacent in the M&A field, while there is doubt whether the lender has the ability to sell off its units or buy new ones.

``I don't know how many deals the KDB tried after Min took charge of the bank last year. The number appears to be substantial but the KDB could not conclude a single one,'' said a Seoul analyst who declined to be named.

``Have a look at the case of Daewoo Shipbuilding & Marine Engineering. If the sales of Daewoo Engineering & Construction also breaks down, many would question its ability as a competent M&A player,'' he said.

The blunders started midway through last year, when the KDB attempted to purchase Lehman Brothers, which eventually collapsed last September causing the global financial crisis.

The KDB gave up on the investment bank, then the world's fourth-largest player in the lucrative industry, but observers point out that the maneuver associated with Lehman itself was doomed.

Late last year, the KDB agreed with Hanwha Group to sell Daewoo Shipbuilding, the world's third-largest shipyard, for 6.3 trillion won. Hanwha is one of the 10 largest conglomerates in Korea, known as chaebol.

But Hanwha opted not to snap up the shipbuilder in the midst of the global financial crisis. The KDB, the biggest shareholder of Daewoo Shipbuilding, is now in litigation with Hanwha over a 315 billion won deposit.

This year, cash-strapped Dongbu HiTek hoped to sell its profitable unit Dongbu Metal to its main creditor the KDB but negotiations fell apart due to a huge gap in valuation.

Most recently, the KDB co-underwrote the sale of Daewoo Construction together with Nomura Securities to become the second-largest shareholder in the company.

Yet, the KDB relinquished its underwriting contract this month for unknown reasons and concerns are arising that the attempt could not be successful because preferred bidders have reportedly yet to garner financing.

Two preferred bidders ― a domestic private equity fund and a U.S. consortium ― were picked last week but they are known not to be financially ready to pay trillions of won to buy Daewoo Construction.

When contacted, KDB said that things would improve down the road.
``Over the past year, the financial distress negatively affected the M&A market. As the economy shows signs of recovery, our M&A projects are expected to improve,'' a KDB official said.

thkim@koreatimes.co.kr