POSCO Scraps Plan to Buy Daewoo Shipbuilding

      May 17, 2010 13:06

      Steelmaker POSCO is no longer interested in acquiring Daewoo Shipbuilding and Marine Engineering after being widely tipped as the top candidate for the ailing firm, a company executive said Sunday.

      The change of heart is believed to have been influenced by strong opposition from Warren Buffett's firm Berkshire Hathaway, which owns a stake in Korea's largest steelmaker.

      POSCO sources said Charlie Munger, the vice chairman of Berkshire Hathaway, attended an investor relations seminar by the steelmaker in the U.S. early this year and warned the shipbuilding business in Korea has no long-term competitiveness, so if POSCO acquires Daewoo Shipbuilding, Berkshire could sell its stake in the steelmaker.

      As of last year, Berkshire Hathaway owned 5.2 percent of POSCO. If Berkshire Hathaway dumps the stake, other foreign investors could follow suit.

      POSCO in response wrote to Berkshire saying it would exercise "maximum caution" in any plan to acquire Daewoo Shipbuilding. "It is difficult to push ahead with the plan if you face opposition from Berkshire Hathaway," a POSCO executive said. "Although we didn't say so explicitly, we informed them of our intention not to pursue the acquisition."

      Another reason is believed to be POSCO's selection as the preferred bidder for another offshoot of the Daewoo Group, Daewoo International, which is increasing fears among foreign investors that the company is expanding too fast. Before the selection, credit ratings firm Moody's said last Wednesday it was considering lowering the steelmaker's credit rating since aggressive expansionary steps could worsen its financial health.

      • Copyright © Chosunilbo & Chosun.com
      이전 기사 다음 기사
      기사 목록 맨 위로