Dongbu Group headquarters in southern Seoul (Credit Photo @ Yonhap )
SEOUL, Sept. 25 (Yonhap) — Four potential buyers, including Hyundai Steel and SeAH Group, have joined a race to buy Dongbu Special Steel that has been put up for sale as part of its parent conglomerate’s restructuring program, financial sources said Thursday. The two companies along with another local listed company and a foreign private equity fund (PEF) submitted their bid proposals for the special steel maker to sale manager Deloitte Anjin LLC, the sources said. Of the four, Hyundai Steel and SeAH are likely to win the bid, they added. The Dongbu company set up in 1979 makes cold heading quality products and cold drawing bars that are used to make cars and planes, as well as in the construction sector. Korea Development Bank (KDB), which took control of the special steel maker for 110 billion won (US$105.6 million) in June by creating its own PEF, had sent letters to prospective purchasers late last week asking them to forward their letters of intent (LOI) for evaluation by Thursday. Hyundai Steel is in the process of constructing its own specialty steel work at its Dangjin plant, 123 kilometers south of Seoul, that is scheduled to go on-line in 2016. It said by buying Dongbu Special Steel, Hyundai Steel will be able to push for an economy of scale and contribute to a solid vertical integration of specialty steel production within Hyundai Motor Group. The Dangjin plant will have an annual output capacity of 1 million tons. Hyundai Steel is an affiliate of the world’s fifth largest automotive conglomerate that includes the flagships Hyundai Motor Co. and Kia Motors Corp., the country’s two largest carmakers. SeAH also wants to buy the Dongbu company because it wants to hold onto its leading position in the domestic special steel industry. At present SeAH’s domestic market share stands at 43 percent with Dongbu Special Steel holding 23 percent. The conglomerate is, moreover, in the process of taking over POSCO Specialty Steel that maintains an edge in the stainless steel business. Senior executives of both Hyundai Steel and SeAH have said they want the company for their own. KDB and Deloitte Anjin said they plan to arrange a formal bid in October and pick the preferred bidder for the special steel company in November.