Jeongan Steel: Woori PE to Give Up Right of First Refusal... Poong Jeon Nonferrous Metal Poised to Acquire It [fn Market Watch]

[Financial News] Woori Private Equity (PE), the stalking-horse bidder (holder of the right of first refusal) in the contest to acquire steel pipe and steel plate manufacturer Jeongan Steel, has decided to waive its right of first refusal. It judged that it would be difficult to spend 80 billion won or more, the amount offered by Poong Jeon Nonferrous Metal, which submitted the only bid in the final round. Poong Jeon Nonferrous Metal, a leading M&A player in the nonferrous metals industry, is now seen as the likely buyer of Jeongan Steel.
According to investment banking (IB) industry sources on the 6th, Woori PE notified Samil Accounting Corporation, the sale advisor for Jeongan Steel, of its intention to waive its right of first refusal.
The decision was based on the view that it would be difficult to acquire Jeongan Steel at the price offered by Poong Jeon Nonferrous Metal. The Daegu Rehabilitation Court named Poong Jeon Nonferrous Metal the highest-scoring bidder, so Woori PE must offer a higher price than it within three business days to acquire the company. However, Woori PE will retain its stalking-horse status until Poong Jeon Nonferrous Metal signs an acquisition agreement for Jeongan Steel.
In the final bidding for Jeongan Steel, SM Group and a paper company had previously proceeded only as far as due diligence and did not submit bids.
Poong Jeon Nonferrous Metal is a leading M&A player in the nonferrous metals industry. It began expanding through acquisitions in 1997 with Pijeiartek. In 2016, it acquired Hwachang, a subsidiary of LS-Nikko Copper, for about 10 billion won, and entered the special steel sector by acquiring Boyang Special Metals. In 2024, it acquired the former Ulsan branch of Altechno Metal through Dawon Alloy Co., Ltd.
Founded in 1983, Poong Jeon Nonferrous Metal is Korea’s largest aluminum alloy producer. Along with its affiliates, it handles five major nonferrous metals, excluding tin. Revenue rose from 100 billion won in 2005 to over 1 trillion won in 2021, reaching 1.75 trillion won last year. An acquisition of Jeongan Steel could enable vertical integration from materials to processing and help expand its supply-chain presence with automakers such as Hyundai Motor Company and Kia Corporation.
Jeongan Steel is a steel pipe and steel plate manufacturer based in Dalseong County, Daegu. Its major customers include Hyundai Motor Company, Kia Corporation and HYUNDAI STEELPIPE. Since the screening process and facility investment required to register as an automotive supplier are demanding, its existing supply chain itself is considered a barrier to entry. The appraised real estate value of its three factories in Daegu, Pyeongtaek and Gyeongju alone amounts to 80.3 billion won.
While its Daegu steel pipe factory has been steadily profitable, its Pyeongtaek steel plate toll-processing plant has continued to post losses. The company invested 17.9 billion won in a plastic pyrolysis oil plant in Gyeongju, but commercialization was delayed. Along with 7.9 billion won in loans to related parties and the burden of joint guarantees for affiliates’ debts, this led it 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 official said, “As restructuring in the steel industry accelerates, bolt-on deals in which financially strong strategic investors (SIs) acquire assets that can create synergies with their existing businesses are likely to increase,” adding, “For Poong Jeon Nonferrous Metal, the value of leveraging Jeongan Steel’s existing automotive supply chain and production facilities seems to have been decisive in its acquisition decision.”

[email protected] Gang Gu-gwi Reporter