Is deal’s death really a boon?
After the breakdown of Hanwha Group’s bid to buy Daewoo Shipbuilding and Marine Engineering, shares in both companies closed lower yesterday.But the fall does not necessarily mean the breakdown is negative for the two firms, analysts said. It could instead be a boon, in particular for Hanwha, they said.
Hanwha Group fell 1,400 won ($1), or 5.2 percent, to 25,750 won. Daewoo Shipbuilding edged down 150 won, or 0.7 percent, to 20,250 won. The Kospi, where the two are listed, fell 2.1 percent on the day.
Over the past two months since the preliminary deal, Hanwha displayed problems in its ability to finance the deal. The market, however, reacted rather positively, as analysts said using affiliate money could put the subsidiaries at risk.
“The breakdown is obviously good for Hanwha,” said Thomas Lee, an analyst with Samsung Securities. “It fell today because the market already expected this since last week and people thought today that the stock had risen too much.”
Hanwha rose in nine out of 12 previous trading days through Tuesday, including the last three straight days.
Lee maintained his hold rating on Hanwha, but said he may upgrade it if it becomes more clear that the firm is not stepping back into the deal.
According to Tong Yang Securities analyst Lee Jae-won, the market remains split about the impact of the breakdown of the deal.
“People who see the collapse of the deal as good think Daewoo deserves a better owner than Hanwha. But others think it only ended up raising uncertainty over Daewoo’s future,” he said.
By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]
with the Korea JoongAng Daily
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