Tong Yang Moolsan, a South Korean manufacturer of agricultural machinery and equipment, has submitted a final bid to acquire full stake in local rival Kukje Machinery Company from its majority shareholder Dongkuk Steel Mill and creditors. Source: Pulse
If the deal goes through, Tong Yang, currently third in the industry, will share the lead in local agricultural equipment market with dominant player Daedong Industrial.
According to multiple sources from the investment banking industry, Tong Yang Moolsan took part in the final bid to buy Kukje Machinery in an auction led by EY Han Young, the Korean member firm of Ernst & Young, that invited bidders in December.
State utility company Seoul City Gas that supplies gas to Seoul and around the capital and initially considered as the likely buyer dug out of the race.
A decision on preferred bidder will be made sometime in the near future.
Dongkuk Steel Mill owns 50.82% of shares in Kukje Machinery and the rest by creditor banks after the machinery company entered a workout program in 2011 that included bailout.
State-run Korea Development Bank (KDB) has 28.62% in Kukje Machinery, KB Kookmin Bank with 11.56%, Yuanta Securities Korea Co. with 3.1%, and KT Capital with 2.31%.
Dongkuk Steel Mill has been under stringent streamlining through non-core asset sale to improve its financial health.
Last year, Dongkuk Steel Mill posted 196.5 billion won (US$163.03 million) in operating income. Its balance sheet would be further helped by the sale of its agricultural machinery unit.
Kukje Machinery is one of the country’s top five suppliers of agricultural equipment along with LS Mtron Ltd, Tong Yang Moolsan, Daedong Industrial, and Asia Technology Co.
The company makes tractors, combine harvesters, and vegetable transplanters, as well as diesel engines, and supplies them to about 100 countries.
