이 기사는 2021년 07월 12일 07:38 thebell 에 표출된 기사입니다.

Jungheung has become the winner of the race to acquire Daewoo E&C. But in the course of the bidding process, its relationship with Hoban Construction has soured as Hoban ultimately did not submit a bid despite all the signs suggesting otherwise.

The two construction groups had a close relationship as both are based in Jeolla Province, southern South Korea. When Daewoo E&C was first up for sale in 2017, they both showed interest with ambitions for expansion. But only Hoban bid for the company and was named as the preferred buyer, while Jungheung decided to avoid competition and support Hoban.

The deal, however, fell through in early 2018. Three years later, the sale process restarted and Jungheung had a chance to bid for Daewoo E&C.

But this time, Hoban did not make it clear about its intention to join the race. At the beginning of the sale process, Hoban seemed not interested in Daewoo E&C, with Hoban chairman Kim Sang-yeol reportedly telling one of the top executives at Jungheung that it wouldn’t bid for the company.

Despite that, there were signs suggesting Hoban was weighing bidding for Daewoo E&C. In the past weeks, Hoban’s vice president Kim Yang-gi, a former executive with Daewoo E&C, reportedly worked on the valuation of the company. There were also talks about Korea Development Bank’s mergers and acquisitions division, one of the deal managers, having approached chairman Kim.

This led to Jungheung submitting a higher bid for Daewoo E&C, as it was believed that Hoban – which withdrew from the deal three years ago – would need to make a significantly higher bid than those from competing bidders to show its commitment to the acquisition. Jungheung’s first bid was 2.3 trillion won ($2 billion won), compared to the DS Network consortium’s bid of 1.8 trillion won.

Hoban ultimately did not submit an offer, and this came as a big shock to Jungheung. Jung Chang-sun, chairman of Jungheung, reportedly was very upset about that.

“Hoban did not make it clear whether to join the race and this clearly confused Jungheung and led it to raise its bid,” said an industry insider.

“We just studied the company and also did not hire an adviser,” an official at Hoban said. (Reporting by Min-kyu Sin)