South Korea's POSCO , the world's No.4 steelmaker, is considering investing in iron ore, steel mill and shipyard assets in Ukraine, a source close to the situation said on Friday.
The plan is a strategic option that POSCO is considering to improve synergies from its potential takeover of Daewoo Shipbuilding , the source said.
"POSCO signed a letter of intent to invest in Ukraine assets...as they could improve synergies from the Daewoo deal," the source said, adding that the company was looking at other regions for a similar investment.
POSCO, which had been asked by the Korea stock exchange to clarify on the reported deal by 6 p.m. (0900 GMT), declined to comment.
Daewoo Shipbuilding, the world's No.3 shipbuilder, is up for sale by its top shareholders and bidders are asked to submit their letter of intent by next Wednesday.
South Korea is offering a 50.4 percent stake in Daewoo, which was taken over by creditors in 2000 after its parent Daewoo Group collapsed under a mountain of debt, and analysts expect the deal to fetch up to $8 billion, more than double its current market value.
POSCO, which wants to generate 30 percent of consolidated group revenued from non-steel business by 2018, sees the Daewoo deal helping to secure future demand, protecting against possible ship plate oversupply and aiding diversification.
But some analysts and investors have cast doubt on synergies from the Daewoo deal and urged POSCO to focus more on increasing mining assets to raise its mineral self-sufficiency rates, which are less than 20 percent, well below its bigger rival ArcelorMittal's (ISPA.AS: Quote, Profile, Research, Stock Buzz) 50 percent level. Cash-rich POSCO seeks to form a consortium with the National Pension Service and banks in a bid to squeeze rival Daewoo Shipbuilding bidders who may be financially stretched and have problems in securing funds amid tight credit market conditions and raise competitiveness of its potential offer.
Shares in POSCO were down 0.4 percent to 467,000 won, by 0147 GMT beating a 1.8 percent fall in the broader market .
The plan is a strategic option that POSCO is considering to improve synergies from its potential takeover of Daewoo Shipbuilding , the source said.
"POSCO signed a letter of intent to invest in Ukraine assets...as they could improve synergies from the Daewoo deal," the source said, adding that the company was looking at other regions for a similar investment.
POSCO, which had been asked by the Korea stock exchange to clarify on the reported deal by 6 p.m. (0900 GMT), declined to comment.
Daewoo Shipbuilding, the world's No.3 shipbuilder, is up for sale by its top shareholders and bidders are asked to submit their letter of intent by next Wednesday.
South Korea is offering a 50.4 percent stake in Daewoo, which was taken over by creditors in 2000 after its parent Daewoo Group collapsed under a mountain of debt, and analysts expect the deal to fetch up to $8 billion, more than double its current market value.
POSCO, which wants to generate 30 percent of consolidated group revenued from non-steel business by 2018, sees the Daewoo deal helping to secure future demand, protecting against possible ship plate oversupply and aiding diversification.
But some analysts and investors have cast doubt on synergies from the Daewoo deal and urged POSCO to focus more on increasing mining assets to raise its mineral self-sufficiency rates, which are less than 20 percent, well below its bigger rival ArcelorMittal's (ISPA.AS: Quote, Profile, Research, Stock Buzz) 50 percent level. Cash-rich POSCO seeks to form a consortium with the National Pension Service and banks in a bid to squeeze rival Daewoo Shipbuilding bidders who may be financially stretched and have problems in securing funds amid tight credit market conditions and raise competitiveness of its potential offer.
Shares in POSCO were down 0.4 percent to 467,000 won, by 0147 GMT beating a 1.8 percent fall in the broader market .