Hyundai Heavy Industries Group is to complete payment for the acquisition of Doosan Infracore this week, in a deal that would put the ship-focused group atop of the country’s construction equipment industry, according to industry officials Monday.
In February, the group’s holdings company formed a consortium with KDB Investment and signed a contract to buy a controlling 34 percent stake in Doosan Infracore, held by Doosan Heavy Industries. It agreed to pay 850 billion won ($730 million).
HHI is expected to foot the bill by Thursday, media reports said quoting industry sources.
Once the deal is closed, Doosan Infracore will become a subsidiary of Hyundai Genuine, which HHI Group recently launched as an intermediate holding company.
Hyundai Heavy’s own Hyundai Construction Equipment is also under Hyundai Genuine.
With the two — Doosan Infracore and Hyundai Construction Equipment — combined, Hyundai Genuine will control over 50 percent of the domestic market. Globally, Hyundai Genuine would become the world’s fifth or sixth largest player in terms of market share.
According to the 2021 Yellow Table ranking of the world’s 50 largest construction equipment manufacturers released by British publisher KHL, US’ Caterpillar took the largest market share of 13 percent, followed by Japan’s Komatsu with 10.4 percent, and China’s XCMG Group and Sany Group, with 7.9 percent and 7.5 percent, respectively.
If Doosan Infracore’s 3.7 percent and Hyundai Construction Equipment’s 1.2 percent are combined, Hyundai Genuine will account for 4.9 percent, which is the same as China’s Heavy Industry Science & Technology Co.
Hyundai Heavy Industries Group officially launched Hyundai Genuine in July, after it received approvals for the acquisition from antitrust regulators in five countries: Korea, Russia, China, Vietnam and Turkey.
On the day of launch, the group also appointed Kwon Oh-gap, the chairman of the group, and Cho Young-chul, president of Korea Shipbuilding & Offshore Engineering, as co-CEOs.
“Maximizing the synergy of Doosan Infracore and Hyundai Construction Equipment, we will achieve global market share of 5 percent by 2025 and enter the global top five,” Cho said.
With the stake sale, Doosan Group would secure enough cash to meet the requirements for a state bailout to keep the cash-strapped Doosan Heavy Industries & Construction afloat.
Source: The Korea Herald