DOOSAN Group, parent of South Korea's largest excavator maker, said it may sell property and infrastructure assets to finance a bid worth US$3.4 billion to take over Daewoo Shipbuilding & Marine Engineering Co.
Senior Vice President Lee Sang Ha at excavator maker Doosan Infracore Co made the comments in Seoul yesterday, confirmed by group spokesman Bae Kyun Ho. Doosan Corp, the operator of Burger King restaurants and Polo Ralph Lauren stores in the nation, and Doosan Construction & Engineering Co, fell, Bloomberg News reported.
The sale of the 50.4 percent stake in Daewoo Shipbuilding, the world's third-largest shipbuilder, would be the biggest in the shipping industry and South Korea's largest in two years. Financing the sale may become more difficult as the South Korean government plans to tighten lending and limit corporate loans for mergers and acquisitions to rein in inflation.
"It will become more difficult for companies that have not enough cash on hand to submit a higher offer price for Daewoo Shipbuilding," said Yang Hee Joon, an analyst at Mirae Asset Securities Co in Seoul. He has a "hold" rating on Doosan Infracore and a "buy" on Doosan Heavy Industries Co, the nation's biggest power-equipment supplier.
New low
Doosan Corp fell 8.4 percent to close at 147,000 won (US$141), a five-month low, in Seoul. Doosan Construction dropped 1.5 percent to 8,030 won, after declining as much as 7.2 percent.
Doosan Infracore gained 1.7 percent, after falling as much as 4 percent, to close at 27,000 won. Doosan Heavy dropped 0.1 percent to 886,600 won.
Doosan Group's affiliates slid on Wednesday on speculation that they may sell shares to fund the takeover of Daewoo Shipbuilding. Lee denied the speculation yesterday.
State-owned Korea Development Bank and Korea Asset Management Corp are selling a 50.4-percent stake they own in Daewoo Shipbuilding. The equity is worth about 3.53 trillion won based on yesterday's closing price of 36,600 won.
Doosan is also looking for strategic investors to join its bid for Daewoo Shipbuilding. A preferred bidder for the stake could be selected by the end of August.