Smooth Ssangyong Construction M&A... "Due Diligence Completed and Funds Secured"

[Asia Economy Reporter Wan-yong Cha] Global SeAH, which is pursuing the acquisition of Ssangyong Construction, has completed its due diligence process. It has also secured funds for the stock purchase agreement (SPA) expected by the end of this month.

According to sources in the investment and construction industries on the 17th, Global SeAH completed the due diligence that began on June 7th in early August. Although it was delayed by about 2 to 3 weeks from the initially expected mid-July, there appeared to be no major issues.

After completing the due diligence, Global SeAH recently secured funds for the SPA. It decided to procure acquisition financing loans of approximately 100 billion KRW from the Korea Development Bank.

Global SeAH plans to sign the SPA for 99.95% of the shares held by the Dubai Investment Authority within this month by combining the loan funds and its own holdings. Although the exact transaction size has not been disclosed, related industries expect it to be in the range of 200 to 300 billion KRW.

After acquiring the Dubai Investment Authority’s shares, Global SeAH plans to proceed with a new share purchase in October. Through this, it aims to reduce Ssangyong Construction’s debt ratio, which was 635% as of the end of 2021, to the 200% range. However, the specific scale of the capital increase has not yet been announced.

If Ssangyong Construction’s financial soundness improves, it is expected that business opportunities will expand domestically through credit rating upgrades, reduced financial costs, and improved construction capability evaluations. In particular, a leap forward in Ssangyong Construction’s strength in overseas projects is anticipated.

The first overseas project is likely to be the reconstruction project in Ukraine being carried out in Poland. Ssangyong Construction is expected to participate in building temporary residential facilities in the Polish region, where a significant number of Ukrainian refugees reside. It is known that Global SeAH Chairman Woong-ki Kim personally took action for this.

Global SeAH has stated that it will not carry out workforce restructuring following the acquisition of Ssangyong Construction. Considering that Ssangyong Construction is currently suffering from a labor shortage, it is planning large-scale recruitment after the acquisition.

A Ssangyong Construction official said, "This M&A will have mutually beneficial effects for both companies," adding, "Especially, Global SeAH has substantial infrastructure established in the U.S., Latin America, and Asia, so great results in overseas projects are expected."