KDBI "Daewoo Construction Sale, Priority Negotiation Partner to Be Selected Soon"

"Rebid Proposal Under Review... Committed to Achieving M&A Goals"
"Some Media Reports Differ from Facts"
Press Conference on M&A Scheduled for the 5th

Daewoo E&C Euljiro Headquarters Building

KDB Investment (KDBI), the largest shareholder of Daewoo Engineering & Construction, announced on the 4th that it plans to soon select a preferred negotiation partner regarding the sale process of Daewoo Engineering & Construction. Amid growing controversies such as 'secretive sale' and 'irrational procedures' during the sale process, KDBI stated that some recent media reports contain inaccuracies and that it plans to hold a separate M&A-related press conference at 3 p.m. on the 5th.

In a "Notice" distributed to the media on the same day, KDBI said, "Currently, our company is conducting evaluations based on the initial and revised proposals together with the lead managers, and we plan to select a preferred negotiation partner soon after completing internal procedures."

KDBI received final bid proposals for the sale of Daewoo Engineering & Construction on the 25th of last month, and it is known that two parties, Jungheung Construction and the DS Networks consortium, submitted acquisition proposals. Jungheung Construction reportedly offered 2.3 trillion KRW, while the DS Networks consortium offered 1.8 trillion KRW. Due to the significant price difference, Jungheung Construction was effectively favored as the preferred negotiation partner.

Suddenly, on the 2nd, KDBI conducted a re-bidding process with the two parties, Jungheung Construction and the DS Networks consortium, who participated in the final bid. The large price gap between the bids was cited as the reason for the re-bidding decision. It is reported that both Jungheung Construction and the DS Networks consortium submitted new acquisition prices in the re-bid.

The re-bidding sparked criticism that "the sale process was reversed without principles." While re-bidding due to low offered prices occasionally occurs, it is unusual to hold a re-bid because of higher offered prices. There are also claims that if the sale is finalized at a lower price than the initial bid, KDBI could face allegations of breach of trust.

KDBI’s decision to hold an unplanned M&A-related press conference appears to be in response to such criticisms and controversies. KDBI stated, "Some media reports so far have contained content somewhat different from the actual progress," and added, "Due to the confidentiality of the M&A process and the potential impact on the proposing parties, we were unable to immediately explain and respond to each report."

KDBI plans to proceed with the sale process as scheduled. KDBI said, "While the proposals from the two qualified bidders meet some of our expectations in certain conditions, there is a need to review other conditions," and added, "We will do our best to achieve the main M&A goals we have set (① sale price, ② certainty of deal closure, ③ presentation of vision and strategy for Daewoo Engineering & Construction) by comprehensively considering the proposals."