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Hyundai Heavy, MBK among prelim bidders of Doosan Infracore

Sep 28, 2020 (Gmt+09:00)

Hyundai Heavy Industries Holdings Co., the world’s biggest shipbuilder and South Korea-based MBK Partners have submitted non-binding bids for a controlling stake in Doosan Infracore Co., valued at up to $850 million, according to Hyundai and investment banking sources on Sept. 28.

Seoul-based Glenwood Private Equity also bid by the deadline for a 36% stake in the construction equipment unit of Doosan Group.

Hyundai Heavy said in a regulatory filing on Monday that it has handed in a preliminary bid for Doosan Infracore, in response to a local newspaper’s report about its participation in the auction. It did not elaborate further.

The shipbuilding group, touted as the strongest candidate, formed a consortium with financial investor KDB Investment, a unit of the state-run Korea Development Bank, to bid for the machinery maker, said the sources.

Doosan Group is offering a 36% stake in Infracore as part of its restructuring efforts for debt-ridden Doosan Heavy Industries & Construction Co. The stake, owned by Doosan Heavy, is estimated to be worth 800 billion won to 1 trillion won ($682 million-$852 million).

Hyundai Construction Equipment Co., which has a similar business portfolio to Infracore, will lead the bidding in the consortium with KDB Investment. Both companies compete in the excavator market, alongside Volvo Group.

Hyundai Heavy had tried to team up with other private equity firms to prepare for the Infracore deal, only to face differences of opinion in the control of Infracore, according to the sources. Now that Hyundai Heavy has joined forces with the investment arm it can ride on the support of KDB, which is spearheading Doosan’s restructuring, said one of the industry sources.

MBK Partners participated in the non-binding bid, armed with 8 trillion won it raised in its fifth blind pool fund this year. In 2016, the private-equity firm acquired Doosan Infracore’s machine tools business.

Glenwood, specializing in carve-out deals for top conglomerates, is one of the five domestic PEFs winning a combined 800 billion won worth of mandates from the National Pension Service this year.

The likelihood of the stake sale increased following Doosan Group’s offer to ease the financial burden linked to an ongoing legal dispute between Infracore and some financial investors, including IMM Private Equity. Doosan Heavy said it would take responsibility for a contingent liability related to the lawsuit, awaiting a Supreme Court ruling.

The deadline for non-binding bids were postponed by one week to Sept. 28 after some potential bidders requested more time for preparation. Credit Suisse is handling the sale.

Shares in Hyundai Heavy gained 2.9% to close at 211,000 won with Doosan Infracore down 3.8% at 9,130 won.

Write to Jun Ho Chan and Chae-Yeon Kim at chacha@hankyung.com



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