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A steel-making giant is one of several bidders for a ship-builder. Reports have it that Posco, the South Korean firm that is the world’s fourth largest steel producer, is mulling acquisition of the world’s third biggest ship-building company, Daewoo Shipbuilding & Marine Engineers. A 50.40 per cent stake Daewoo, worth $7 to 8 billion, is up for sale, it is learnt. The Posco management, which has been planning acquisition of Daewoo for about a year, is belie ved to have sent its letter of intent to Korean Development Bank, Daewoo’s single largest shareholder owning 31 per cent and also the manager of the sale. Since Daewoo also makes submarines for South Korea’s Navy, the Government is not allowing foreigners to bid on security grounds. The other bidders therefore include Hyundai Heavy industries, the world’s biggest shipbuilder; GS group, a construction, energy and retail conglomerate; and Hanwha Group, an insurance and chemical firm. Posco, reports suggest, is in favour of Daewoo building more technologically sophisticated vessels like drilling ships and offshore oil and gas platforms rather than tankers and bulk carriers. It also feels there is plenty of scope for cost reduction in the operation of the shipyard. But then, there are sceptics who would prefer the steel giant to concentrate on increasing access to raw material sources than venturing into new fields.

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