POSCO to make solo bid for Daewoo Shipbuilding after GS drops out

(ATTN: ADDS quote of GS Holdings executive in para 5-6; stock reactions in final two paras; TRIMS)
SEOUL, Oct. 14 (Yonhap) -- POSCO Co., the world's fourth-largest steelmaker, said Tuesday it will make a solo bid for a controlling stake in Daewoo Shipbuilding & Marine Engineering Co., after GS Group abruptly pulled out of its consortium a day earlier.

POSCO and GS, an energy and retail conglomerate, jointly submitted a final bid to
buy a 50.4 percent stake in the world's No. 3 shipyard on Monday, but GS dropped
out hours after the final offer was made.
"Although GS put an end to the consortium and withdrew from the bid, POSCO
decided to continue to push for a proposed acquisition of Daewoo Shipbuilding in
the form of a solo bid," POSCO said in a statement.
State-run Korea Development Bank, which is managing the sale of Daewoo
Shipbuilding, is reviewing whether to accept POSCO's solo bid since it comes
after the deadline for final bids had passed. KDB plans to announce the result of
its review later in the day.
In a press conference on Tuesday, Lim Byeong-yong, vice president of GS Holdings
Corp., the holding company of GS, said the group decided to pull out of the bid
because POSCO offered an "aggressive" price.
"We wouldn't buy a Sonata sedan for 60 million won (US$50,000)" Lim told
reporters, in an indirect reference to the size of the bid placed by POSCO. A
mid-sized Sonata sedan sells for about 21 million won in South Korea.
With GS dropping its joint bid, POSCO, Hyundai Heavy Industries Co., the world's
largest shipbuilder, and Hanwha Group, an insurance and chemicals conglomerate,
are now competing for control of Daewoo Shipbuilding.
Some analysts say the Daewoo Shipbuilding stake may fetch as low as US$4 billion,
far below an earlier estimate of $7 billion made when potential bidders were
invited to submit their preliminary bids in late August.
The transaction, if successful, would be one of the biggest asset sales by South
Korea's state-run financial institutions, which took over a number of indebted
private companies in the wake of the 1997-98 Asian financial crisis.
KDB, the largest shareholder of Daewoo Shipbuilding, plans to pick a preferred
bidder as early as Oct. 25.
For weeks officials at KDB have indicated that bids for Daewoo Shipbuilding would
fail if offering prices were too low.
Foreign investors were banned on security grounds from bidding for Daewoo
Shipbuilding, which manufactures submarines for the South Korean Navy.
Shares of GS Holdings jumped a daily limit of 15 percent to 28,500 won at one
point in an afternoon trading in Seoul. Daewoo Shipbuilding gained 13.3 percent
to 22,100 won and POSCO rose 3.32 percent to 389,000 won.
Hyundai Heavy jumped 12.94 percent to 227,000 won, while Hanwha Corp., a unit of
Hanwha Group, fell 5.9 percent to 36,700 won.