SEOUL, KOREA - POSCO Group has officially given up its bid to acquire the Dongbu Incheon Steel plant and Dongbu Power's Dangjin plant. Accordingly, the pace of restructuring for Dongbu Group would be affected significantly. POSCO Group chairman Kwon Oh-joon said on June 24 in a press conference held at the group's headquarters, "We decided to halt the review process to purchase the Dongbu Package. It was based on the judgment that the benefits and synergies wouldn't be as big as the financial cost we will have to pay."

 

Earlier in March, Korea Development Bank, the principal creditor bank to Dongbu Group, had proposed to POSCO that it purchase the steel mill and the power generator as a package. Since then, POSCO has reviewed the proposal, with accompanying due diligence on the assets.

 

Mr. Kwon said in the press conference that the main reasons for deciding against the assets on the market were the product lineups of Dongbu Incheon Steel are somehow overlapping with those of POSCO Coated & Color Steel while the acquisition would not help so much in terms of cost saving, future profitability, and market expansion effects for the whole group.

 

He further said that it is unlikely that his company would be interested if the two assets are offered for sale again separately. Instead, POSCO Group will take over the 100-percent stake in Tongyang Power, the company holding the license to build a thermal power plant in Samcheok, Gangwon Province, at 431.1 billion won through its power subsidiary POSCO Energy.