By Kang Seung-woo
POSCO Chairman Chung Joon-yang said Monday that the steel manufacturer will be on the prowl for additional mergers and acquisitions (M&A), with its next target likely to be Daewoo Shipbuilding and Marine Engineering, according to analysts.
“POSCO is good at planning, building and running steel mills but we want to be competitive at acquisitions,” Chung said in a speech at a forum hosted by the Korea International Trade Association (KITA) in Seoul.
“From now, we will actively pursue more mergers and acquisitions if there are opportunities.”
Chung said that top global steel producer ArcelorMittal has set M&A as a key strategic target from the beginning and POSCO, the world’s No. 3 steel maker, which had not been as aggressive, will now also seek to acquire firms.
But the 62-year-old told reporters after his speech that nothing appealing was currently up for sale.
“As for now, there are no pending merger targets. If there are opportunities, we will seek more M&A,” Chung said.
POSCO, which has been a strong candidate to make headlines in the M&A market, acquired the nation’s No. 1 trading firm Daewoo International, which is focused on overseas resource development, in August by buying a 68.15 percent stake for $2.28 billion (3.37 trillion won), in its largest takeover ever. The trading company is involved in a gas project in Myanmar.
Since Chung was at the helm in March 2009, he has been active in a series of mergers and acquisitions to boost the company’s profile through strategic investments and mergers at home and abroad.
POSCO has taken over Asia Stainless Corporation in Vietnam and Taihan ST Corp. in Korea in the past years. The company is pushing to build more plants in foreign countries as well. The steelmaker is pursuing a $7 billion plant in India’s Karnataka state in addition to a $12 billion project in Orissa and a $6 billion Indonesian plant.
Chung’s speech is expected to spark POSCO’s attempt to acquire Daewoo Shipbuilding and Marine Engineering, industry observers say, although POSCO has kept saying that it is not interested in taking over the country’s No. 2 ship maker.
“We do not have any plans to take over Daewoo shipbuilding,” Chung said after the takeover of Daewoo International.
“It is not up for sale, so we have nothing to say about it,” a POSCO official said but did not rule out a bid if it is put on the block.
POSCO was on track to take over Daewoo Shipbuilding in 2008, but its plans didn’t go through after its partner GS Group abruptly dropped out of the bidding process at the last minute.
In addition, POSCO is in talks to buy Elkem, a Norwegian maker of silicon for solar panels, according to reports.