Jungheung Construction to take over Daewoo E&C
Jungheung Group Chairman Jung Chang-sun, left, poses with KDB Investment CEO Lee Dae-hyun after signing a stock purchase agreement to take over 50.75 percent of Daewoo E&C's shares, at a hotel in Seoul, on Dec. 9. Courtesy of Jungheung Group
By Kim Jae-heun
Jungheung Group will acquire a controlling stake in Daewoo E&C, the company said Thursday.
In a ceremony, Jungheung signed a stock purchase agreement (SPA) with Daewoo E&C to take over 50.75 percent of its shares.
The SPA came five months after Jungheung was chosen as the preferred bidder, in July. The construction firm offered to pay 2.1 trillion won ($1.78 billion) and the price is said to have been finalized.
Jungheung will also apply for a review of the acquisition with the Fair Trade Commission (FTC) this month as the joining of the two entities may help them see increased market share.
Combining the construction capacity values of three firms equates to 11.91 trillion won, which will place Jungheung Group in third place, surpassing GS E&C (9.92 trillion won) and POSCO E&C (9.51 trillion won), which currently rank third and fourth, respectively. Once the review is done, the management rights of Daewoo E&C will be completely handed over to Jungheung from Korea Development Bank Investment, which took ownership of the firm from Kumho Asiana Group in 2010.
Jungheung vowed to pursue the “fair treatment” of the executives and employees at Daewoo E&C, while guaranteeing an improvement in the company's debt ratio. These efforts are to dispel the concern among Daewoo E&C employees that their company's competitiveness will decrease with the smaller firm of Jungheung acquiring them.
Jungheung's priority goal is to beef up Daewoo E&C's overseas business while reducing its debt ratio from 284 percent to 105 percent, said the company. Jungheung Group Chairman Jung Chang-sun said in its message to Daewoo E&C staff that he will put all the firm's capabilities into creating the world's top construction group, which will not be shaken by any challenges or effects from the external environment.