SMㆍHo Ban Construction in aggressive M&A?The trend of construction industry to change
Park Sang Gil | sweatsk@ | 2018-02-01 10:46:29
Samrae Midas Group (SM) and Ho Ban Construction are aggressively entering the M & A market. SM Group, which has only three construction subsidiaries, is preparing to acquire Samhwan Enterprise, a major player in overseas construction. The lakeside construction will acquire Daewoo E & C, the third largest construction company in Korea.
According to the industry on January 31, the SM group was selected as a preliminary buyer of a trilateral enterprise on January 29. The company, which has been steadily acquiring construction companies since 2010, succeeded in acquiring nine of them when they acquired the company. SM group, which is a construction industry, owns three construction subsidiaries: Woebang, Samra, and Samra Midus. The company acquired Woobang Construction in 2010 and Shinchang Construction (now Woobang Construction Industry) in 2011, starting with the acquisition of Jinduk Industrial (current Woobang Industry) in 2004, and the construction of Sungwoo Construction, Taegil Construction and Donga Construction in 2016. Previous year, Daewon Construction, an affiliate of Gyeongnam and Gyeongnam, was acquired. With aggressive expansion, SM Group is expected to grow into a large-scale construction company with KRW 1 trillion in sales and KRW 5 trillion in assets.
Meanwhile Ho Ban Construction was chosen as the preferred bidder for Daewoo E & C. The lakeside construction will acquire Daewoo E & C as a divestment method, which will acquire 40% of the stake in Daewoo E & C from Daewoo E & C (Daewoo E & C) at KRW 7700 per share and 10.75% after two years. The acquisition price, which is based on the entire stake in the sale, is estimated at KRW 1,642.4 billion, while the acquisition price of 40% stake is estimated at KRW 1.28 trillion. Daewoo E & C and Daewoo E & It is estimated to be half of acquisition cost.
There was a controversy over the sale price and the preference for Ho Ban companies because the amount and terms of the acquisition fell below the expectations of the KDB. The Korea Development Bank (KDB) reportedly made a last-minute ditch until it delayed the announcement of the first-person negotiations. The Korea Development Bank (KDB) concluded a memorandum of understanding (MOU) with the construction of a lakeside this month, finalized the final sale contract after a close inspection, and concluded the contract for sale this summer.
The total amount of Ho Ban Construction assets is KRW 7 trillion as of 2016, and it is expected to exceed KRW 10 trillion with the acquisition of Daewoo E & C. Hyundai E & C`s total assets amounted to KRW 18.47 trillion (end of last year`s consolidated basis).
Construction industry experts analyzed that the reasons for the aggressive settlement of construction companies are credit ratings, lower interest rates, and business diversification. If the M & A succeeds, SM Group will become a comprehensive construction company that exceeds assets 5 trillion won and sales KRW 1 trillion.
Meanwhile, Cho Hyun-wook, vice president of the Daegu Economy Research Institute, said, "The larger the company`s size, the better the credit rating and the lower the interest rate on loans, Construction companies are having difficulty winning orders with a maximum interest rate of up to 7% in the financial sector.
By Park Sang Gil sweatsk@
[ copyright ⓒ The Digitaltimes ]
According to the industry on January 31, the SM group was selected as a preliminary buyer of a trilateral enterprise on January 29. The company, which has been steadily acquiring construction companies since 2010, succeeded in acquiring nine of them when they acquired the company. SM group, which is a construction industry, owns three construction subsidiaries: Woebang, Samra, and Samra Midus. The company acquired Woobang Construction in 2010 and Shinchang Construction (now Woobang Construction Industry) in 2011, starting with the acquisition of Jinduk Industrial (current Woobang Industry) in 2004, and the construction of Sungwoo Construction, Taegil Construction and Donga Construction in 2016. Previous year, Daewon Construction, an affiliate of Gyeongnam and Gyeongnam, was acquired. With aggressive expansion, SM Group is expected to grow into a large-scale construction company with KRW 1 trillion in sales and KRW 5 trillion in assets.
Meanwhile Ho Ban Construction was chosen as the preferred bidder for Daewoo E & C. The lakeside construction will acquire Daewoo E & C as a divestment method, which will acquire 40% of the stake in Daewoo E & C from Daewoo E & C (Daewoo E & C) at KRW 7700 per share and 10.75% after two years. The acquisition price, which is based on the entire stake in the sale, is estimated at KRW 1,642.4 billion, while the acquisition price of 40% stake is estimated at KRW 1.28 trillion. Daewoo E & C and Daewoo E & It is estimated to be half of acquisition cost.
There was a controversy over the sale price and the preference for Ho Ban companies because the amount and terms of the acquisition fell below the expectations of the KDB. The Korea Development Bank (KDB) reportedly made a last-minute ditch until it delayed the announcement of the first-person negotiations. The Korea Development Bank (KDB) concluded a memorandum of understanding (MOU) with the construction of a lakeside this month, finalized the final sale contract after a close inspection, and concluded the contract for sale this summer.
The total amount of Ho Ban Construction assets is KRW 7 trillion as of 2016, and it is expected to exceed KRW 10 trillion with the acquisition of Daewoo E & C. Hyundai E & C`s total assets amounted to KRW 18.47 trillion (end of last year`s consolidated basis).
Construction industry experts analyzed that the reasons for the aggressive settlement of construction companies are credit ratings, lower interest rates, and business diversification. If the M & A succeeds, SM Group will become a comprehensive construction company that exceeds assets 5 trillion won and sales KRW 1 trillion.
Meanwhile, Cho Hyun-wook, vice president of the Daegu Economy Research Institute, said, "The larger the company`s size, the better the credit rating and the lower the interest rate on loans, Construction companies are having difficulty winning orders with a maximum interest rate of up to 7% in the financial sector.
By Park Sang Gil sweatsk@