Jungheung Construction Signs MOU to Acquire Daewoo Construction..."Acquisition to be Completed Within the Year"

Jungheung Construction Headquarters

Jungheung Construction, selected as the preferred bidder for the acquisition of Daewoo Engineering & Construction, is accelerating efforts to complete the acquisition within this year.

On the 1st, KDB Investment (KDBI), the largest shareholder of Daewoo Engineering & Construction, announced, "We signed a memorandum of understanding (MOU) with Jungheung Construction regarding the sale of Daewoo Engineering & Construction shares on the 30th of last month."

The shares for sale amount to 210,931,209 shares (a 50.75% stake). This MOU signing comes about a month after Jungheung Construction was selected as the preferred bidder for Daewoo Engineering & Construction on the 5th of last month. The transaction amount is expected to be around 2.1 trillion KRW.

A KDBI official stated, "We plan to proceed smoothly with the sale process to support Daewoo Engineering & Construction in achieving prompt management stabilization as well as establishing a foundation for sustainable growth."

Following the signing of this MOU, due diligence and the stock purchase agreement (SPA) are scheduled.

Jungheung Group stated on the 6th of last month, "We will swiftly proceed with the MOU signing with KDBI, the seller of Daewoo Engineering & Construction, due diligence, stock purchase agreement, and merger notification," adding, "We plan to complete the acquisition within this year."

It is known that Jungheung Construction has paid a penalty deposit of 50 billion KRW. Even if Jungheung Construction changes its mind and abandons the acquisition during the due diligence process, this amount will not be refunded.

However, the path ahead is not smooth as the Daewoo Engineering & Construction labor union has announced a general strike to block the sale.

The Daewoo Engineering & Construction labor union, which has opposed the sale claiming it was rushed, will begin a general strike on the 18th of next month.

This strike will be conducted in the form of a work-from-home strike to comply with COVID-19 prevention guidelines.

Before the general strike, a "one-person tent protest" and an "avatar strike" are ongoing in front of Daewoo Engineering & Construction’s headquarters in Euljiro, Jung-gu, Seoul. The avatar strike is a method where union members do not gather in person but show solidarity by collecting safety helmets from union members across the country at one location.

The Daewoo Engineering & Construction labor union plans to escalate the strike in stages according to the COVID-19 situation, starting with the first general strike. A union official said, "We will make every effort to block the buyer’s due diligence by Jungheung Construction."