POSCO to make joint Daewoo bid with GS Group

POSCO and GS Group, rival South Korean bidders for Daewoo Shipbuilding, said yesterday they would team up in the race to buy the world’s No. 3 shipbuilder. POSCO, the world’s fourth-largest steelmaker, and GS Holdings , the holding company for energy-to-construction group GS, said in separate statements they were forming a consortium to bid for Daewoo.

“Forming a consortium will help secure medium- and long-term foreign funds,”

POSCO said in a statement, adding it and GS are in talks with a European bank and Middle East investors, respectively, to raise funds. Daewoo was initially expected to fetch as much as $8 billion, but a 63% fall in the company’s share price so far this year has seen the anticipated deal value slump to $4 billion-$5 billion at best.

Combining both steel making and energy businesses with shipbuilding would also increase benefits of the deal, POSCO said. The tie-up could give POSCO-GS advantage over other bidders, Hanwha Group and Hyundai Heavy Industries.