3-4 Companies Including Hyundai Heavy Industries Group Participate in Doosan Infracore Preliminary Bidding (Comprehensive)

[Asia Economy Reporter Ki-min Lee] It is reported that 3 to 4 parties, including Hyundai Heavy Industries Group and private equity funds (PEF), participated in the acquisition bid for Doosan Infracore, which is considered the final stage of Doosan Group's restructuring process.

According to industry sources on the 28th, Credit Suisse (CS), the lead sales agent, conducted a preliminary bidding for the 36.07% stake in Doosan Infracore held by Doosan Heavy Industries on the same day. As a result of the bid deadline, Hyundai Heavy Industries Group, MBK Partners, and Glenwood PE reportedly entered the acquisition battle. The industry expects that once the final candidates are selected soon, due diligence will be conducted to evaluate Doosan Infracore's corporate value.

In particular, Hyundai Heavy Industries Group attracted attention by submitting a preliminary bid proposal for the selection of the preferred bidder for Doosan Infracore's sale on this day. Hyundai Heavy Industries Group had previously denied acquisition rumors by publicly stating that "there has been no consideration of acquisition" regarding reports about pursuing the acquisition of Doosan Infracore.

However, it is reported that Doosan Infracore's subsidiary, Doosan Infracore China (DICC), is responsible for contingent liabilities amounting to approximately 700 billion KRW due to lawsuits, which led to participation in the acquisition bid. Especially, the formation of a consortium between Hyundai Heavy Industries Holdings and Korea Development Bank Investment (KDBI), a financial investor (FI), reduced the acquisition cost burden, which is considered a key factor enabling participation in this preliminary bid.

In the industry, there is growing expectation that if Hyundai Heavy Industries Group, which has Hyundai Construction Equipment as a subsidiary, acquires Doosan Infracore, the domestic No. 1, it could enter the top 10 global market share worth 240 trillion KRW, not only in the domestic market but also worldwide. According to the 'Yellow Table' statistics by the UK construction heavy equipment media group KHL, Doosan Infracore (including Doosan Bobcat) and Hyundai Construction Equipment ranked 9th and 22nd in the global market share based on last year's sales, with 3.3% and 1.2%, respectively. Excluding Doosan Bobcat, which accounts for more than half of Doosan Infracore's sales, Doosan Infracore's global market share decreases. However, if Hyundai Heavy Industries Group acquires Doosan Infracore, it will gain a favorable position to target the Chinese market, where demand for heavy equipment is steadily increasing.

Based on Hyundai Heavy Industries Holdings' consolidated financial statements for the first half of this year, cash and cash equivalents amount to approximately 2.2242 trillion KRW. Hyundai Construction Equipment also holds over 800 billion KRW in cash and cash equivalents, indicating sufficient acquisition capacity. If Hyundai Heavy Industries Group acquires Doosan Infracore, the domestic construction equipment market will be reorganized into a 'Big 2' system with Hyundai Construction Equipment, which acquired Doosan Infracore, and Volvo Construction Equipment.