Originally published 9/29/2020; updated 8/2/2021
The Korea Herald reports regulators have approved the acquisition of Doosan Infracore by Hyundai Heavy Industries. The Korea Fair Trade Commission gave its approval as it does not believe the merger will hinder market competition in the region.
It was first announced in 2020 that Doosan Group was looking to sell its shares of the company to help improve its finances and repay debts held by Doosan Heavy Industries & Construction, and that Hyundai was a top contender early on. In December 2020, it was announced that Hyundai was the preferred bidder.
Hyundai signed a deal in February 2021 to acquire a 35% stake in Doosan Infracore; its subsidiary Hyundai Genuine Co. took over that stake in April.
Per The Korea Herald, regulators' approval of the deal with also aid Doosan Heavy with its corporate restructuring. The deal will also help Hyundai Genuine to increase its market presence in Korea as well as the global construction market.
Acquisition Timeline
In early September 2020, Doosan Infracore, which is South Korea’s largest construction equipment maker, announced the opening of preliminary bidding for a controlling stake in its operations. At that time, Hyundai Heavy Industries Group emerged as a top-tier bidder. On December 10, 2020, it was announced that Hyundai Heavy has been selected as the preferred bidder. Respective parties including creditors were informed Thursday morning.
Hyundai Heavy Industries Group Chosen as Preferred Bidder for Doosan Infracore
The sale of Doosan Infracore is part of the restructuring process for the beleaguered Doosan Heavy Industries & Construction, which was facing a 4.2 trillion won debt load scheduled to come due before the end of the year. The power plant builder took a major hit when the South Korean government chose to depart from nuclear and coal power.
Doosan Heavy is selling a 35% stake in Doosan Infracore and its management. The company’s majority stake in U.S.-based Doosan Bobcat is not included as part of the sale. While the sale price has not been disclosed, it is estimated at between 700 billion and 800 billion won.
Hyundai Heavy Industries Holdings – parent company of Hyundai Construction Equipment Co. – entered into the bidding process on September 28 after Doosan Group indicated it would repay any overseas debts owned by Doosan Infracore. According to The Korean Economic Daily Global Edition, Hyundai Heavy was chosen as the winning bidder "for its fundraising ability, thanks to its consortium with the state-run Korea Development Bank (KDB), alongside its anticipated synergy with Doosan Infracore's construction equipment operations."
The combination of Hyundai Construction Equipment and Doosan Infracore will reportedly create a new construction equipment powerhouse. The two entities currently stand at No. 20 and No. 9 in the global construction equipment market, according to a Pulse News report. The joining of the two companies is set to create the world’s fifth-largest construction equipment player, and No. 1 in South Korea.
In addition, the acquisition will further expand Hyundai Construction’s global presence, particularly in China where Doosan Infracore currently dominates among foreign suppliers. Doosan Infracore's excavator operations will also help to enhance Hyundai's excavator engine business.
