[Exclusive] “Nonferrous M&A heavyweight” Poong Jeon Nonferrous Metal poised to acquire Jeongan Steel [fn Market Watch]

[Financial News] A major player in the nonferrous metals industry’s M&A market, Poong Jeon Nonferrous Metal has emerged as a leading contender to acquire Jeongan Steel, a steel pipe and steel plate manufacturer undergoing rehabilitation proceedings. Poong Jeon, the sole participant in the final bidding, is reported to have submitted a higher bid than Woori Private Equity (PE), the stalking horse and holder of the right of first refusal. If Woori PE does not exercise that right, Poong Jeon will become Jeongan Steel’s new owner.
According to investment banking (IB) industry sources on the 3rd, a court reportedly approved Poong Jeon as the top-scoring bidder for the sale of Jeongan Steel the previous day. Poong Jeon’s bid was about 80 billion won, reportedly exceeding the price Woori PE had set earlier.
Poong Jeon was the only participant in the final bidding conducted by Samil Accounting Corporation, the lead manager for the sale of Jeongan Steel, according to reports. SM Group and a paper company proceeded only as far as due diligence and did not submit bids.
The sale is being conducted through a stalking-horse process, in which a prospective buyer is selected before an open competitive auction. If the Daegu Rehabilitation Court selects Poong Jeon as the top-scoring bidder and notifies Woori PE, Woori PE must submit a higher bid than Poong Jeon’s within three business days to acquire the company. In effect, the ball is now in Woori PE’s court.
Poong Jeon is a leading M&A player in the nonferrous metals industry. It began expanding through acquisitions in 1997 with P.J. R-Tech. In 2016, it acquired Hwanchang, a subsidiary of LS-Nikko Copper, for about 10 billion won, and entered the specialty steel sector by acquiring Boyang Special Metals. After participating in the 2023 bid for spent-battery recycler Segi Ritech, it acquired the former Altechno Metal Ulsan branch through Dawon Alloy Co., Ltd. in 2024.
Founded in 1983, Poong Jeon is South Korea’s largest aluminum alloy producer. Together with its affiliates, it handles the five major nonferrous metals other than tin. Revenue, which stood at 100 billion won in 2005, surpassed 1 trillion won in 2021 and reached 1.75 trillion won last year. Acquiring Jeongan Steel could enable vertical integration from materials to processing and help expand its automotive supply chain, including with Hyundai Motor Company and Kia Corporation.
Jeongan Steel is a steel pipe and steel plate manufacturer based in Dalseong County, Daegu. Its key customers include Hyundai Motor Company, Kia Corporation and HYUNDAI STEELPIPE. Because qualification as an automotive supplier involves rigorous screening and substantial investment in facilities, the existing supply chain itself is viewed as a barrier to entry. The appraised value of the real estate at its three plants in Daegu, Pyeongtaek and Gyeongju alone totals 80.3 billion won.
However, while the Daegu steel pipe plant generated stable profits, the Pyeongtaek steel plate contract-processing plant continued to post losses. The company invested 17.9 billion won in a plastic pyrolysis oil plant in Gyeongju, but commercialization was delayed. Combined with 7.9 billion won in loans to related parties and the burden of joint and several guarantees for affiliates’ debts, this led the company to apply for rehabilitation proceedings last December. According to the investigation report, its liquidation value of 69 billion won exceeds its going-concern value of 65.6 billion won.
An IB industry source said, “As restructuring in the steel industry accelerates, bolt-on deals are likely to increase, with cash-rich strategic investors (SIs) acquiring assets that can generate synergies with their existing businesses,” and assessed, “For Jeongan Steel, too, the value of its existing automotive supply chain and production facilities appears to be central to an acquisition decision.”
[email protected] Kang Gu-gwi Reporter