Antitrust agency paves way for Jungheung to restructure Daewoo E&C
Daewoo E&C's headquarters in Seoul / Courtesy of Daewoo E&C
By Park Jae-hyuk
Jungheung Group has received permission to speed up restructuring of Daewoo E&C, after the Fair Trade Commission (FTC) gave its final approval on Thursday for the medium-sized builder's acquisition of a controlling 50.75 percent stake in the larger firm for 2 trillion won ($1.6 billion).
“We approved the acquisition last week, as it is not expected to hamper competition in the market,” an FTC official said. “Jungheung is expected to expand its presence in a wider range of fields beyond domestic apartment construction, such as international projects and plant construction.”
According to industry officials, the buyer is expected to replace most executives of its newly acquired subsidiary next week with people who have worked for the Gwangju-headquartered builder.
Around 40 senior managers, including incumbent co-CEOs Kim Hyung and Chung Hang-ki, were reportedly forced to leave the company, although Daewoo E&C CEO nominee Baek Jung-wan was spared along with a few executives.
There is speculation that the new owner will give positions with responsibility over industrial accidents to Daewoo E&C employees, while assigning Jungheung employees to the jobs of handling the subsidiary's finances, strategies and procurements.
Jungheung is not expected to face much more difficulty in tightening its control over Daewoo E&C, after it reached an agreement earlier this month with unionized workers at Daewoo E&C, who stopped their nine-month protest against the sale of their company.
The results of Daewoo E&C's executive reshuffle will be announced after its extraordinary general meeting of shareholders slated for next Monday, according to Jungheung.
Earlier this year, the medium-size builder attempted to appoint Chairman Jung Chang-sun's son-in-law, Herald Corp. Executive Vice President Kim Bo-hyun, as executive director of Daewoo E&C.
Kim, however, was banned from joining Daewoo E&C's board of directors, because the former Air Force general is unable to be employed by a private enterprise capitalized at over 1 billion won, until three years after his retirement from military service in April 2020.
Lawyer Lee In-seok from the law firm Lee & Ko was therefore recommended as a candidate for external director, to be appointed at the shareholders meeting.