Hanwha wins Daewoo bid

Hanwha Group was chosen by South Korea’s state-run Korea Development Bank (KDB) as the preferred bidder for a controlling stake in Daewoo Shipbuilding & Marine Engineering. Chung In-Sung, deputy governor of the KDB, said “Hanwha was found to best fit our criteria of selection, including bid price, management ability and fund-raising plan.” Hanwha, a chemicals-to-brokerage group with roots in explosive maker Hanwha Corp, beat rival bidder Hyundai Heavy in the bid for a 50.4% stake of the world’s third-largest shipbuilder. The deal is estimated to fetch up to $5 billion, although the KDB declined to quote the bid price although an official at KDB said Hanwha proposed a higher price than the bank’s own estimate.

The initial enthusiasm for Daewoo has cooled considerably as its shares have slid nearly 80% this year on global financial market turmoil and a slowing industry outlook. The current market value for the 50.4% stake in Daewoo is 1.06 trillion won ($756 million). The shipbuilding industry is considered highly vulnerable to the global economic downturn. Still, Daewoo’s high-margin energy vessel business may give Hanwha a new growth engine as well as strong cash flow.