Goldman Sachs Group Inc is out as co-adviser of the sale of Daewoo Shipbuilding & Marine Engineering Co, the world's third-biggest shipyard.
Korea Development Bank reversed its earlier decision to have Goldman be a preferred bidder as co-adviser of the sale of a 50.4 percent stake in Daewoo Shipbuilding, the state-run bank said in an e-mailed statement yesterday.
The bank and Goldman “failed to reach an agreement” on terms of the contract as stake-sale adviser, the statement said.
Christopher Jun, Goldman’s Seoul-based spokesman, declined to comment on the announcement by telephone.
The bank is the biggest shareholder of Daewoo Shipbuilding, with a 31 percent stake, which the bank is selling as it prepares for its own privatization. Korea Asset Management Corp, a state- run agency set up to liquidate bad debt, holds 19 percent.
“A procedural delay in the Daewoo Shipbulding merger is inevitable with this move,” said Jeong Dong-ik, an analyst at CJ Investment & Securities Co.
“Still, if Korea Development Bank finds a new arranger who’s free from interest conflicts, that could make up for the delay by avoiding a clash with its union and public criticism,” Jeong said.
He rates Daewoo Shipbuilding a “buy.”
Daewooo Shipbuilding’s labor union last month authorized a strike to protest the plan to sell the shipyard stake. They haven’t walked off the job yet.
Korea Development Bank on April 21 said Goldman would help the bank arrange the sale of controlling stake in Daewoo Shipbuilding and planned to sign an agreement soon to jointly handle the deal. The contract hasn’t been signed yet, Jun said.
Daewoo Shipbuilding has a market value of 8.24 trillion won (US$7.9 billion) based on the stock’s closing price on Friday.
The Korean-language Internet newswire Edaily earlier reported that Korea Development decided not to hire Goldman as the sale arranger because of potential interest conflict related to Goldman’s stake in a Chinese shipyard, citing unidentified industry officials.
A total of 17 companies had submitted proposals to handle the shipyard stake sale, including UBS AG, South Korea’s Samsung Securities Co., Woori Investment & Securities Co and Daewoo Securities Co, the Edaily report said.
A preferred bidder for the shipbuilder could be picked as early as August, Kim Young-kee, executive director at Korea Development Bank, said on March 26.