Selected as Preferred Negotiation Partner for Acquisition of Daewoo E&C
Management Policy Emphasizing Cash Flow and Stability
Unwavering Business Expansion... Approaching 3rd Place in Industry
A young man who started as a carpenter at a construction site at the age of 19 has risen to become the owner of the third-largest construction group in the industry after 50 years. The success story of Chung Chang-sun (78), chairman of the Joongheung Construction Group, is drawing attention as it may reach its climax with the acquisition of Daewoo Construction.
According to industry sources on the 6th, KDB Investment (KDBI), a subsidiary of KDB Industrial Bank specializing in restructuring, selected the Joongheung consortium as the preferred bidder for the merger and acquisition (M&A) of Daewoo Construction the day before. Joongheung Construction Group currently oversees about 30 subsidiaries in housing, construction, and civil engineering, including Joongheung Togeon, ranked 15th in construction capability evaluation, and Joongheung Construction, ranked 35th. If it acquires Daewoo Construction, which ranked 6th in last year's construction capability evaluation, Joongheung Construction Group will rise to third place in the industry, following Samsung C&T and Hyundai Construction.
Born in 1943 in Gwangju, Chairman Chung began his career as a carpenter before turning 20. Later, together with acquaintances he met on site, he founded a company called Geumnam Housing in 1983. This was the precursor to Joongheung Construction, established six years later. Based in the Honam region, Joongheung Construction steadily grew and expanded its market to the metropolitan area, establishing itself as a mid-sized construction group with about 30 subsidiaries in housing, construction, and civil engineering. In 2015, it expanded its business enough to be included for the first time in the list of large business groups subject to public disclosure.
The industry attributes Joongheung's continued growth despite the ups and downs of the construction market to Chairman Chung's management philosophy. On his desk lies the company's cash flow statement for three years. He plans the cash flow for 36 months in advance and reviews it every three months. What draws attention is his 'Three No (不) Principles': 'No purchase of non-business assets,' 'Avoid giving guarantees as much as possible,' and 'Do not take on projects expected to run at a loss.'
This meticulous financial management is evaluated as the reason behind the ability to acquire Daewoo Construction, which has a market capitalization of about 3.7 trillion won. Lee Dae-hyun, CEO of KDB Investment, praised Joongheung Construction's detailed funding plan and said, "The selection of the preferred bidder was made after comprehensively considering the sale price, speed and certainty of the transaction, and Daewoo Construction's growth and stable management."
From a financial perspective, Chairman Chung is somewhat conservative, but as a manager, he also possesses a cool, competitive spirit. Joongheung Construction initially offered 2.3 trillion won in the main bid, but when the price gap with the runner-up was too large, it is known that they submitted a revised proposal to KDBI. Joongheung employed a 'cliff-edge tactic' that did not hesitate to accept a no-deal scenario, and it is said that Chairman Chung personally led this acquisition strategy.
Meanwhile, Joongheung Construction Group announced that it plans to complete the acquisition of Daewoo Construction within the year and nurture Daewoo Construction into the world's best real estate platform through active investment in the future.
On the same day, Joongheung Group released an official statement saying, "We will promptly proceed with the signing of a memorandum of understanding (MOU) with KDB Investment, the seller of Daewoo Construction, due diligence, stock purchase agreement (SPA), and corporate merger notification to complete the acquisition within the year."
Regarding the funding for the acquisition, Joongheung Group plans to temporarily borrow some short-term bridge loans. However, Joongheung Group explained, "Most of the loans will be repaid with the group's operating cash flow expected to flow in by next year, so the acquisition of Daewoo Construction will be made virtually without external borrowing."
Joongheung Group is committed to investing generously to make Daewoo Construction's 'Prugio' brand the number one in Korea. A Joongheung Group official said, "Combining Joongheung's strength in large-scale real estate development, excellent housing brand, and Daewoo Construction's outstanding construction, civil engineering, and plant construction capabilities along with manpower will allow us to grow one step further as a leading construction group representing Korea."
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