Largest Defense Business
Hanwha Group is jumping into the nation’s matchless defense group by taking over Doosan DST and Korea Aerospace Industries (KAI) soon. As Hanwha Techwin, the defense arm of Hanwha Group, has been seeking to sell part of shares in KAI, industry sources say that the group gave up the acquisition of the nation’s sole aircraft manufacturer. However, investment banking industry sources believe that Hanwha Group will hold an unchallenged position in the defense industry, along with the takeover of Doosan DST.
According to investment banking sources on February 2, Doosan Group and financial investors (FI), including IMM Private Equity, held a preliminary bidding to sell off Doosan DST last month and will have an official bidding for the deal around on February 29.
Hanwha Techwin and LIG Nex1 are expected to compete to acquire Doosan DST. In the bidding battle, Hanwha Group is worthy of notice. LIG Nex1 has been already preparing and showing the strong will to take over Doosan DST for a long time. In contrast, Hanwha Group had not a strong will for the takeover as the group was named as the acquisition prospect of KAI. However, Hanwha Techwin started focusing on the acquisition of Doosan DST after the company sold 4 out of its 10 percent stake in KAI for block trade last month. Industry sources say that Hanwha Techwin will invest 280 billion won (US$231.6 million), which was raised through the sell-off in KAI shares, in acquiring Doosan DST.
An official from the investment banking industry said, “Hanwha Group is internally considering the takeover of both Doosan DST and KAI, along with FI. After all, the question is whether Hanwha Group can scrape up enough money or not.” Hanwha Group should pay the total acquisition money for the takeovers of Samsung General Chemicals and Samsung Techwin until 2017.
The acquisition price of the takeovers of Doosan DST worth about 700 to 800 billion won (US$579 million to 661.7 million) and KAI worth 3 trillion won (US$2.48 billion) amounts to nearly 4 trillion won (US$3.31 billion). Some say that private equity funds have participated in the bidding battle for Doosan DST as FI after they noticed Hanwha Group’s strategy. An official from the investment banking industry said, “Private equity funds are highly likely to have big rally depending on Hanwha Group’s movement in the future.”