Ssangyong may go to foreign firm
After a round of preliminary bidding, Ssangyong said last week that a German engineering company, M+W, and a Hong Kong-based developer, Shui On, were selected as final bidders. Four Korean companies showed interest in the past but opted not to bid. They were Booyoung, a construction company; E-Land, a clothing retailer; Iljin, an automotive component maker; and Purmil, a dairy company.
“Ssangyong is not very attractive for Korean companies,” said an analyst who declined to be named. “Due to the economic slump, local businesses do not have enough money to spend either.”
However, Ssangyong’s track record in the overseas construction business led foreign companies like M+W to make bids, analysts said.
“Korean builders have a good reputation in the Middle East and Asia, where the construction market is booming,” said Doo Seong-gyu, a senior researcher at Construction and Economy Research Institute.
Creditors own 50 percent of Ssangyong, followed by Korea Asset Management Corp. with 38.8 percent and employee shareholders with 15.8 percent. The rest is owned by Ssangyong Cement and individual investors.
M+W has had its eye on Korean construction companies. The German engineering company partnered with Hyundai Group when the group made a bid for Hyundai Engineering and Construction last year. M+W was the only bidder in preliminary bidding in February. The bidding became invalid because there was only one bidder.
It would be the second time a foreign company acquired a local builder if M+W buys Ssangyong. A subsidiary of Lone Star Funds bought Kukdong Engineering and Construction in 2003 but sold it to Woongjin Group in 2007.
Ssangyong is famous for building luxury hotels abroad but does not have much experience in overseas plant or home construction, which are seeing explosive growth in the Middle East.
Ssangyong has had a turbulent history since the Asian financial crisis of the late 1990s. The Ssangyong Group dissolved and its affiliates were taken over by its creditors.
The construction arm went under a debt workout program in 1999 and finished it in 2004. During the period, Ssangyong laid off hundreds of its employees and downsized its plant construction operation.
Employee shareholders are closely watching the situation.
To a question on what employee stockholders think of the situation, Lee Won-hyuk, head of the employee shareholders, said, “There seems be no other choice since there are no Korean bidders. Regardless of bidders’ nationality, we hope that a company that can create synergy will be a winning bidder.”
By Limb Jae-un [firstname.lastname@example.org]