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Global Sae-A Group, World’s Top Apparel Manufacturer and Exporter, in Talks to Acquire Ssangyong E&C

2022-06-02

 

Global Sae-A Group, a holding company that owns Sae-A Trading, the world’s largest apparel manufacturer and exporter, is bidding to acquire Ssangyong E&C, a prime leader in overseas construction. According to the M&A industry, the apparel company has recently submitted a letter of intent to the Investment Corporation of Dubai (ICD), the largest shareholder of Ssangyong E&C, to buy the Korean contractor, thereby gearing up to secure the deal. 

 

The acquisition opportunity has come to light as the ICD has decided to adjust its portfolio of subsidiaries and affiliates in response to the COVID-19 pandemic.

 

Global Sae-A’s core subsidiaries include its flagship firm Sae-A Trading, the world’s largest apparel manufacturer and exporter Tailim Paper, a top comprehensive paper manufacturer Sae-A STX Entech, a global EPC (engineering, procurement, construction) company and Valmax Technology Corporation, a green energy company. With more than 10 subsidiaries and 10 overseas production bases, the company recorded revenues of KRW 4.25 trillion (some USD 3.29 billion) in 2021.

 

The acquisition will allow Global Sae-A to benefit from KRW 7 trillion (some USD 5.4 billion) worth of Ssangyong E&C’s favorable order backlog as well as a synergy built on the latter’s global recognition, construction experience, and technological prowess. 

 

If the deal takes place, Ssangyong E&C will be able to participate in a wide variety of domestic projects, including Sae-A Group and logistics-related construction projects private development projects housing and hotel projects hydrogen energy and other future-oriented projects, and plant-related projects.

 

As for overseas business, Ssangyong E&C’s considerable record of orders would be complemented by Sea-A Group’s expertise in foreign investment, driving the former to grow further as a developer. Moreover, Sae-A’s reach in the Central and South American market would allow Ssangyong E&C to participate in the region’s diverse infrastructure (e.g., electric power, railways and roads) and urban development projects that are supported by diverse funding and investment options, not to mention construction projects related to Sea-A’s global branches and networks. 

 

Synergy with Sae-A’s construction-related subsidiaries is also expected. Sae-A STX Entech has strengths in the EPC of domestic and overseas oil and gas facilities, power plants, and new & renewable energy. At the same time, Ssangyong E&C has gained EPC experience through the S-Oil Onsan Refinery Project. Since the differing experiences of the two companies are complementary to each other, they would undoubtedly create synergy at home and abroad.

 

Similarly, a new partnership with Valmax, a green energy company specializing in liquefied natural gas (LNG) and hydrogen, and Ssangyong E&C, the first and the only contractor currently involved in the Pyeongtaek Hydrogen Fuel Cell Project ordered by Korea Gas Corporation, would help the latter reinforce its green project capabilities and transform itself into a green contractor built on ESG management.

 

The most notable aspect of this M&A deal is that the ICD requested that the acquirer include a capital increase as part of a long-term plan for the sustainable development of Ssangyong E&C.

 

Currently, Global Sae-A and the ICD have agreed in principle to increase Ssangyong E&C’s capital to promote its further growth. Both parties are involved in negotiations regarding the details, with the goal of signing a stock trade deal in July or late August. The value of the capital increase will exceed Global Sae-A’s acquisition value of Ssangyong E&C shares owned by the ICD. If realized, the acquisition will give the construction company its first private owner in 24 years. With this change in ownership, Ssangyong E&C is expected to enjoy direct investment aimed at growth as well as proactive risk management.