Taekwang and US Private Equity Fund Seek to Acquire K-Chosun... "For Investment Purposes"

"Not at the Level of Securing Management Control"
Main Bidding Scheduled for January Next Year

Taekwang Group has reportedly submitted a Letter of Intent (LOI) to acquire K-Chosun (formerly STX Offshore & Shipbuilding) in partnership with the US-based private equity fund Texas Pacific Group (TPG).

Exterior view of K-Chosun. The Asia Business Daily DB

According to industry sources on November 13, the Taekwang-TPG consortium recently submitted an LOI to the consortium of United Asset Management Company (UAMCO) and KHI, which is overseeing the sale of K-Chosun. The sale includes a 99.58% stake in the company and corporate bonds, with the acquisition price reported to be around 500 billion won.

Taekwang Group clarified, however, that its participation in this preliminary bid is not aimed at acquiring management control. A representative from Taekwang stated, “It is true that we submitted the LOI jointly with the US private equity fund, but not at a level that would secure management control,” adding, “This should be seen as an investment approach, such as participating with a partial stake.”

The main bidding process is scheduled for January next year. The three major shipbuilders-HD Hyundai Heavy Industries, Hanwha Ocean, and Samsung Heavy Industries-are said not to have participated in the preliminary bidding. Industry insiders believe that the boom in orders for mid-sized shipbuilders, as well as expectations for increased demand for maintenance, repair, and overhaul (MRO) related to the Mars project, are the main factors driving interest in the acquisition.