This article was published on Jan. 17, 2025, at 5:01 p.m. on the CHOSUNBIZ MoneyMove site.
UAMCO is in discussions with Easy Construction to select a preferred negotiation partner for the acquisition of publicly listed PAPERCOREA in the securities market. Specific discussions are ongoing regarding the sale price and acquisition structure for a conditional investment contract. After selecting a preferred negotiation partner, the selling side plans to proceed with a public competitive bid.
According to investment banking (IB) industry sources on the 17th, UAMCO, which is in the process of selling PAPERCOREA, has entered into specific discussions to sign a conditional equity sale agreement with Easy Construction. Previously, Easy Construction had signed a memorandum of understanding (MOU) with UAMCO and conducted corporate due diligence. An IB industry official noted, "UAMCO and Easy Construction are engaging in preliminary discussions for the selection of a stalking horse before the main bidding."
The method of sale has been decided to be the stalking horse method. A stalking horse is a process of selecting a preferred negotiation partner and conducting a public competitive bid simultaneously. If a buyer appears with more favorable terms than Easy Construction in the main bid, the intended acquirer will change. However, if Easy Construction accepts the conditions presented by the bidding participants, the preferred negotiation partner Easy Construction will acquire PAPERCOREA.
UAMCO began the sale process of PAPERCOREA last year. The sale targets include 154,143,336 shares (86.6%) of PAPERCOREA held by UAMCO Corporate Rebound Fund VII and 102.8 billion won worth of the 111th convertible bond (CB). UAMCO acquired PAPERCOREA for 30 billion won in 2017. Subsequently, in July 2023, UAMCO participated in a capital increase for PAPERCOREA to improve its financial structure, injecting an additional 220 billion won.
PAPERCOREA, established in 1944, is a major player in the domestic paper industry. It holds a solid number one market share in the domestic packaging paper sector. By the end of September last year, it recorded consolidated sales of 218.4 billion won and an operating profit of 1.7 billion won. Besides its competitiveness in the packaging paper market, the fact that PAPERCOREA owns land capable of real estate development is also noted as a point of investment.
Earlier, the first-generation developer Shinyoung Group also participated in the acquisition bidding for PAPERCOREA in 2022. The interest in PAPERCOREA from the real estate development industry, from Shinyoung Group to Easy Construction, is attributed to the land secured through the relocation of the factory to the Gunsan DIOcean City site. The revenue generated from the four implementation subsidiaries, including DIOcean City First and DIOcean City Two, reached 1.2 trillion won from 2018 to 2023.
Currently, some residential land and school sites remain. Last year, development projects were briefly halted due to a real estate market downturn. The school site is reported to be undergoing a district unit planning change to convert it into neighborhood facilities and cultural facilities. An IB industry official explained, "In terms of potential, there is a large assessment that future real estate development upside remains," and added, "Participation from regional mid-sized construction companies in the main bidding is expected."