GS Construction, Doosan Infracore Withdraws from Final Bidding "Due Diligence Period Was Short... Not a Complete Withdrawal"

[Asia Economy Reporter Choi Dong-hyun] GS Engineering & Construction, a leading candidate in the Doosan Infracore acquisition battle, has been confirmed to have not participated in the final bidding.

According to the investment banking (IB) industry on the 24th, Credit Suisse (CS), the sales agent, closed the final bidding by 2 p.m. that day, and it was confirmed that the GS Engineering & Construction-Dominus Investment consortium did not participate. It was also confirmed that MBK Partners and Glenwood PE, who were initially shortlisted, did not participate. However, the Hyundai Heavy Industries Holdings-Korea Development Bank Investment (KDBI) consortium announced through a public disclosure that they participated in the final bidding.

A GS Engineering & Construction official said, "Compared to other qualified bidders, the review period was short and due diligence was insufficient, so an internal decision was made not to participate in the final bidding."

However, GS Engineering & Construction stated that they would consider opportunities if the contingent liability risk of Doosan Infracore China (DICC), estimated at about 800 billion KRW, is resolved. A GS Engineering & Construction official said, "It is just that we have not submitted a price yet, and we have not completely given up on the acquisition," adding, "Due diligence will continue, and we will closely monitor the DICC lawsuit and seek future response measures."

Initially, the sale of Doosan Infracore was widely expected to be hindered by contingent liability issues related to the DICC lawsuit. Doosan Infracore is currently engaged in litigation with the financial investors (FIs) of its Chinese subsidiary, DICC. The court ruled in favor of Doosan Infracore in the first trial, but the second trial favored the FIs. If Doosan Infracore loses in the Supreme Court ruling expected early next year, it may have to bear contingent liabilities of up to 1 trillion KRW. Although the Doosan Group has stated that it will not pass on the DICC contingent liabilities in relation to the sale of Doosan Infracore shares, the market is feeling considerable burden.