South Korea’s Daewoo Development Co., Ltd. confirmed it would be making a final bid for bigger domestic rival Sambu Construction Co. in consortium with financial investors to increase its scale.

Daewoo Development was among seven bidders that handed in letters of intent for Sambu put up for sale by the bankruptcy court in a preliminary bid that closed last Thursday. The final auction is on June 8.

Daewoo Development, ranked 135th in terms of order book last year, has teamed up with financial investor J.S. Asset Management Co. to acquire the bigger company that ranked 53th.

Daewoo Development after split from former Daewoo Motor Sales Co. delivered profits for the last two years. Taking over mid-sized Sambu Construction is expected to help Daewoo Development enhance internal stability and find businesses that spur growth.

The company official said that Daewoo Development plans to expand its business portfolio from the previous structure focusing on construction to include other areas such as engineering and plant. The acquisition, if successful, will allow Daewoo Development to secure business stability by jointly taking part in overseas projects such as those in China. In the long run, it will help the company raise its corporate value, the official added.

Daewoo Development has been putting out efforts to expand the size of its businesses by participating in bids to take over other construction firms. In February, it formed a consortium to take part in a bid to acquire Daewoo Shipbuilding & Marine Engineering Construction Co. The company’s plan was to lead the acquisition as a strategic investor while receiving overseas funds by attracting financial investors. However, it fell behind in the three-way race against Keystone Private Equity L.P. and a consortium led by Bumyang Construction Co. which in the end was named as preferred bidder.

Daewoo Development - former construction division of Daewoo Motor Sales that merged with Handok General Construction Co. in 1997 - has raised 4.08 trillion won ($3.6 billion) in revenue from its housing business so far. It has promoted a total of 6.5 trillion won worth of businesses through public, private and overseas projects. In recent years, Daewoo Development has been seeking a wide range of redevelopment and regional housing projects through its apartment brand iaan. It has also stretched its portfolio to include food services industry by taking over French bakery brand Brioche Doree.

By Yong Hwan-jin

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