Hyundai Steel-led consortium buys Dongbu Special Steel

SEOUL, Nov. 28 (Yonhap) -- A consortium led by Hyundai Steel Co., South Korea's No. 2 steelmaker, on Friday said it has purchased Dongbu Special Steel Co., as part of ongoing efforts to strengthen its competitive edge.

The purchase worth 294.3 billion won (US$265.8 million) comes a month after the consortium was tapped as the preferred bidder for the special steel company.

The consortium consists of Hyundai Steel, Hyundai Hysco Co. and Hyundai Wia Corp., affiliates of Hyundai Motor Group, the world's fifth-largest automotive conglomerate. It outbid SeAH Group, which had also been interested in the special steel company.

Hyundai Steel holds a 50 percent stake in the consortium, with Hyundai Hysco and Hyundai Wia Corp. owning 40 percent and 10 percent each.

Hyundai Steel said the acquisition of Dongbu Special Steel will help it with the vertical integration process of making parts needed for automobiles, and augment a special steel facility being built at its main Dangjin plant, some 123 kilometers south of Seoul. This plant will start its operation in 2016.

Dongbu turns various types of rolled steel into engine and transmission parts used in cars.

The Hyundai consortium bought the mill from Korea Development Bank (KDB), which took ownership of it after paying Dongbu Group 110 billion won. Dongbu Group used the money to repay its debts and push forward conglomerate-wide restructuring.

Under the Dongbu-KDB deal, the lender will pay the former any profits it generates from the re-sale.

Industry sources said that the official merger will take place in January, after the country's anti-trust authorities reviews the transaction to make certain no unfair trading laws have been violated.

yonngong@yna.co.kr
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