![[단독] Doosan Infra’s Chinese subsidiary investor plans to sell shares](https://file.mk.co.kr/meet/neds/2021/02/image_readtop_2021_124014_16125254584532841.jpg "[단독] Doosan Infra’s Chinese subsidiary investor plans to sell shares")
It is reported that the financial investor (FI) of Doosan Infracore China (DICC), a Chinese subsidiary of Doosan Infracore, will proceed to sell DICC. As Doosan Infracore acquirers Hyundai Heavy Industries Holdings and KDB Investment Consortium entrusted the solution to DICC-related issues to Doosan Group and acquired Doosan Infracore, the spark of the DICC conflict revived.
According to the investment banking (IB) industry on the 5th, DICC investors such as Mirae Asset Asset Management Private Equity (PE), IMM PE, and Hana Financial Investment PE will exercise the right to sell together (drag along) to recover their investments. Informed. Drag-along is the right to request that minority shareholders sell their shares as well as the majority shareholders’ shares when they sell their shares.
FI owns a 20% stake in DICC, and at the event of a drag-along event, 80% of the DICC stake held by Doosan Infracore can be bundled and sold. It is reported that FI requested the latest DICC financial data from Doosan, but the Doosan Group replied to discuss after the Lunar New Year holidays, saying that the financial data collection was not completed last year. FI has begun to select a sales supervisor and plans to announce the sale through due diligence based on the data provided by Doosan.
On this day, the consortium of Hyundai Heavy Industries Holdings signed a main contract to acquire Doosan Infracore. The Hyundai Heavy Industries Holdings Consortium will acquire a 34.97% stake in Doosan Infracore for 850 billion won. Hyundai Heavy Industries Holdings plans to complete the acquisition process before the third quarter of this year by requesting the fair trade authorities of each country to approve the merger.
Earlier, Doosan Infracore sold a 20% stake in DICC to FI in 2011 for 380 billion won, promising to list DICC on the Chinese stock market within three years. The FI issued an IPO as a way to recover the investment. At the time, the contract between DICC shareholders stipulated that if the IPO is not executed, drag-along can be exercised. In fact, when the IPO was not successful, FI launched a drag-along in 2015 and started selling DICC.
However, as the sale was finalized, FI filed a lawsuit against Doosan Infracore. This is because Doosan Infracore did not fulfill its obligation to cooperate in the sale process, such as providing a reduced scope of disclosure of data.
Last month, the Supreme Court raised Doosan Infracore’s hand, confirming that FI’s drag-along authority remains alive. It is interpreted as the background that FI announced that it would exercise another drag-along. Once FI has decided on a third candidate for acquisition, Doosan can exercise a call option (priority purchase right) to purchase the entire FI stake at the amount suggested by the candidates.
There is a problem that such countermeasures are not rational in view of the time and cost of the sale. For this reason, it is expected to find a solution by calculating an appropriate fair value under bilateral agreement and passing over the stake. FI’s launch of drag-along is also interpreted as a pressure to recover the investment.
Some point out that Doosan has no justification for delaying FI’s exit as DICC’s earnings are improving. An official from the IB industry said, “According to the recent ruling of the Supreme Court, since both Doosan and FI have confirmed their rights and obligations, it is necessary to draw an agreement by calculating an appropriate fair value in consideration of the improvement of DICC performance. It seems to be the best option.
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