Two bidders submitted proposals in the main auction for the public sale of SAMBU Construction, which is undergoing court receivership. With the construction market slump compounded by allegations of stock price manipulation against former and current management, the chances have grown that SAMBU Construction will find a new owner.
According to the investment banking (IB) industry on the 31st, two parties submitted acquisition proposals in the main bid run by Deloitte Anjin as the sell-side adviser for SAMBU Construction. Earlier, in the preliminary bid on the 17th, five prospective buyers submitted letters of intent (LOIs) and conducted preliminary due diligence from the 20th to the 24th, but only two made it to the final main bid. However, it is uncertain whether the sale will proceed as planned, as the two prospective buyers are said to have limited financial capacity.
SAMBU Construction is a builder established in 1948 that holds the country's first civil and architectural construction business license. It handled construction on the Gyeongin Expressway and the Gyeongbu Expressway, Seoul Subway Lines 1–5, and Mapo Bridge. However, after facing a liquidity crunch due to the recent surge in raw material prices and a downturn in the construction market, it filed for court receivership in February this year.
This public sale stems from SAMBU Construction's request to proceed with a pre-approval merger and acquisition (M&A) through a public auction before its rehabilitation plan is approved. Initially, SAMBU Construction pursued the M&A via a "stalking-horse" process, under which it would sign a conditional acquisition agreement and then seek a bidder offering better terms through a public tender. But it failed to secure a buyer due to potential risks, including delays in submitting proof of funds for the acquisition price, the burden of materializing contingent liabilities, and a special counsel investigation into former and current management over alleged stock price manipulation. SAMBU Construction then asked the rehabilitation court to allow a pre-approval M&A through a public sale, and the court approved the request.
The sell-side adviser plans to select a preferred bidder from the two participants in the main bid, then complete the search for a new owner of SAMBU Construction through due diligence and negotiations for the definitive agreement.