Hyundai Steel tapped as prime bidder for Dongbu Special Steel
SEOUL, Oct. 24 (Yonhap) -- Hyundai Steel, South Korea's second-largest steelmaker, has been picked as the preferred bidder to buy Dongbu Special Steel, which is seeking a new owner as part of its parent conglomerate's restructuring program.
Sale managers did not give exact figures, but insiders familiar with the process speculated Hyundai Steel may have offered about 300 billion won (US$282.7 million) for the special steel maker, beating out its main rival SeAH Group.
The move by Hyundai Steel comes as it is pushing ahead with its plan to build a special steel facility at its Dangjin plant, some 123 kilometers south of Seoul. This plant is scheduled to start churning out products from 2016.
The purchase will allow Hyundai to become a direct rival to SeAH for the special steel market.
Hyundai Steel, part of Hyundai Motor Group, the world's fifth largest automotive conglomerate, expressed interest in Dongbu, because the latter's facilities can be used to process special steel parts effectively. Dongbu buys rolled steel products from integrated mills and turns them into parts for car engines and transmissions.
If a final purchase deal is signed, POSCO, the country's largest steel mill, will likely lose a steady client because Hyundai Steel can provide the materials needed for Dongbu Special Steel.
Korea Development Bank (KDB) had taken over the steel mill from Dongbu Group for 110 billion won by creating a private equity fund. Under that agreement, the bank will give the conglomerate proceeds from the sale, which can be used for corporate debt payment and restructuring.
Hyundai Steel is expected to sign a share purchase agreement next month and complete the purchase by January.
yonngong@yna.co.kr
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