M&A

23 November, 2009

UPDATE 1-Kumho picks 2 preferred buyers of Daewoo Eng

* Two preferred buyers seen to have financial ability -Kumho

* S.Korean builder expected to grow share in Middle East

(For FACTBOX on South Korean M&A deals in the pipeline, click on [ID:nSEO336770]

SEOUL, Nov 23 (Reuters) - An Abu Dhabi fund-led consortium and a group including a U.S. builder have been picked as preferred buyers of Daewoo Engineering & Construction Co Ltd (047040.KS), a deal estimated to fetch about $2.6 billion.

Analysts say foreign buyers could be attracted by Daewoo's reputation as a leading South Korean builder of houses and plants, and its record in high-potential markets in the Middle East and Africa.

The Middle East, led by Saudi Arabia and the United Arab Emirates, accounts for 60 percent of South Korean builders' overseas orders, riding the infrastructure construction boom with strong oil prices and buoyant economic growth.

Kumho Asiana Group, parent of the country's No. 4 builder by market value, and sale managers have selected JABEZ Partners and TR America Consortium as preferred negotiators, they said in a joint statement on Monday.

JABEZ Partners attracted wealth fund Abu Dhabi Investment Council (ADIC) as a major investor, while TR America Consortium included Tishman Construction of the United States and an unidentified wealth fund from the Middle East.

"Both have a great deal of synergy potential to generate with Daewoo Engineering & Construction in the Middle East and North American markets and showed their strong intentions for the acquisition during preliminary due diligence period," the statement said.

By the Nov. 18 deadline, three bidders had submitted final bids, including an unidentified Russian company, Kumho said on Saturday.

Both of the preferred buyers are also seen as financially capable of the possible acquisition of the South Korean builder, it added, dismissing speculation that the bidding groups did not have sufficient financial capability to execute the deal.

The two final bidders will study Daewoo Engineering's books in following weeks, with Kumho aiming to complete the sale within the year.

Kumho has put a majority stake in Daewoo Engineering up for sale as it has to buy back a stake held by financial investors at far above the market price in tranches starting in December. [ID:nSEO130689]

Tishman Construction, a privately-held firm headquartered in New York, was the construction manager of One World Trade Center, according to its Web site www.tishmanconstruction.com.

Bidding prices ranged between 20,000 and 24,000 won per share, the Yonhap reported last week, which was far above Monday's closing price of 13,900 won.

Korea Development Bank (KDB) and Nomura (8604.T) are handling the process.

Kim Dong-joon, an HMC Investment & Securities analyst, expects South Korean construction companies, including Hyundai (000720.KS), Samsung (028050.KS) and GS (006360.KS), to increase market share in the Middle East over European and Japanese rivals, with price competitiveness and operating efficiency.

(Reporting by Kim Yeon-hee and Marie-France Han; Additional reporting by Cho Meeyoung; Editing by Ken Wills)

((mf.han@thomsonreuters.com; +82 2 3704 5667; Reuters Messaging: mf.han.reuters.com@reuters.net))

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Source: http://www.reuters.com