South Korea: Hyundai Cement sale bids

Six contenders have submitted a bid for Hyundai Cement Company. Ssangyong Cement Industrial Co, Halla Cement Corp, IMM Private Equity, LK Investment Partners, Hyundai Sungwoo Holdings Co and PineStreet Group have each submitted terms to acquire a 84.56 per cent stake in Hyundai Cement offered by creditors.

Ssangyong Cement Industrial and Halla Cement are expected to lead the buyout, as reported by Pulse News. Owned by private equity funds, the two cement makers have production bases located in coastal regions and would benefit most from the acquisition, as Hyundai Cement has a manufacturing site inland.

Seoul-based PEF Hahn & Co has expanded its presence in the local cement industry after acquiring multiple cement makers including Daehan Cement Co, Ssangyong Cement, Hannam Cement Co and Posfine Co. Glenwood Private Equity and Hong Kong-based PEF Baring Private Equity Asia, which jointly bought out Lafarge Halla Cement (previously Halla Cement) in March 2015, have also expressed keen interest in taking over Hyundai Cement.

Hyundai Cement is South Korea’s sixth-largest cement manufacturer with roughly a 10 per cent market share. The outcome of the sale will affect the South Korean cement industry, as the local market is tightly controlled by Ssangyong Cement Industrial and Hanil Cement Co. If it wins the bid, Ssangyong Cement Industrial would move from holding a 21 per cent market share to solidifying its top position and command 30 per cent. Hanil Cement, currently commanding 10 per cent, would move to rank third in the local market.

Hyundai Sungwoo Holdings Co is another possible contender in the bid. Led by Chung Mong-yong, brother of Chung Mong-sun, who was former chairman of Hyundai Cement, Hyundai Sungwoo Holdings is seeking to regain control of once the same family-owned company.

Market experts expect that the sale price could reach KRW500-600bn (US$428.4-526.1m), including management premiums.