South Korean energy and construction group GS said that it has pulled out of a consortium with POSCO to buy Daewoo Shipbuilding casting a cloud over POSCO's push for the deal.
The abrupt announcement came hours after three major South Korean corporate groups, including steelmaker POSCO and GS, submitted final bids for the controlling stake in Daewoo Shipbuilding & Marine Engineering by the deadline. It was not immediately known why GS had quit the joint bid for 50.4 percent of the world's No. 3 shipbuilder, with the stake estimated to fetch up to $4 billion to $5 billion. GS Group and POSCO, the world's fourth-largest steel maker, announced their surprised tie-up in the race. POSCO spokeswoman Ko Min-jin declined to comment on GS's pullout, but said the company will convene an emergency board meeting to discuss the matter. Kim Tae-gyun, a spokesman for the Korea Development Bank, which is a top shareholder in Daewoo and is also handling the sale, said it was discussing how to react to GS's move. The initial enthusiasm for the deal has weakened as Daewoo's share price has slid 62 percent so far this year, hit by global financial market turmoil and a slowing industry outlook. The 50.4 percent Daewoo stake on sale was initially expected to fetch as much as $8 billion. Daewoo Shipbuilding shares jumped 9.2 percent in a market-wide rebound on Monday, to end at 19,500 won before GS's announcement.
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