Hyundai Heavy seals $757 mn stake purchase in Doosan Infracore

South Korea’s Hyundai Heavy Industries Holdings Co. signed a definitive agreement on Friday to buy a controlling stake in Doosan Infracore Co., a construction equipment maker, for 850 billion won ($757 million).

Under the deal, the holding company of the world’s largest shipbuilder will acquire a 34.97% stake in Doosan Infracore from Doosan Heavy Industries & Construction Co., Hyundai said in a regulatory filing on Feb. 5.

The size of the stake purchase is slightly below the initially expected 36.07%. In December 2020, a consortium led by Hyundai Heavy was named the preferred negotiator to buy a 36.07% stake in Doosan Infracore. KDB Investment, an arm of the state-run Korea Development Bank joined the Hyundai Heavy-led consortium.

The holding company will seek approval of the acquisition from China and other countries, aiming to get the nod around the third quarter of this year. It will be in control of Doosan Infracore and bolster its R&D to create synergy from a business tie-up with Hyundai Construction Equipment Co. Doosan Infracore will continue to be managed independently.

The deal closing follows the Korean Supreme Court ruling last month in favor of Doosan Infracore in a legal dispute with financial investors over a case involving Doosan’s Chinese subsidiary. 

On Thursday, Hyundai Heavy Industries announced a five-for-one share split after it swung to an operating loss of 597.1 billion won in 2020 due to weak shipbuilding demand amid the global pandemic.

Write to Man-Su Choe at bebop@hankyung.com
Yeonhee Kim edited this article.