South Korean conglomerate SK Engineering & Construction has emerged as the preferred bidder for the acquisition of EMC Holdings, billed as the largest wastewater treatment company in the country.
SK E&C has offered 1 trillion won ($843 million; €714 million) to acquire a 100 percent stake in the company put up for sale by private equity firm Affirma Capital.
The two parties are expected to sign a stock purchase agreement this week, SK E&C said, but was unable to provide a timeline for when the deal is expected to close.
SK E&C beat four other bidders, including Goldman Sachs’ merchant banking division and Singapore conglomerate Keppel Corporation. A spokesman for Keppel would not specify which of the group’s subsidiary had submitted a bid, but local media reported it to be Keppel Infrastructure.
“The key points to select a preferred buyer include price, financing, previous merger and acquisition history, and employee retention after M&A,” a source familiar with the deal said. “One trillion won is a significant amount for the deal and SK affiliates have been active in M&A.
Also, as a construction company that continuously builds water pipes, SK E&C’s acquisition will be able to create a synergy effect, the source said.
In addition to construction, SK Group has subsidiaries in the energy and chemicals sectors, generating significant waste through its business activities.
“SK E&C has accelerated environment-friendly business after a recent restructuring focusing on sustainability, to promote economic value and social value,” a spokesman for SK E&C told Infrastructure Investor. “Our efforts to acquire EMC Holdings is part of this environment-friendly initiative.”
He added the acquisition of EMC Holdings is separate from SK’s infrastructure business strategy. “SK E&C will increase its overseas infrastructure PPP projects, such as Turkey’s Canakkale project and the UK’s Silvertown Tunnel project, which are both under construction,” he said.
The Canakkale project entails the construction and operation of a 3.6km-long suspension bridge and an 85km road connecting Malkara with Canakkale in Turkey. The Silvertown Tunnel is being built under the Thames River in East London and will link Silvertown to the Greenwich Peninsula.
EMC Holdings is a major waste and wastewater treatment company in South Korea, operating around 1,000 sewage facilities across the country, according to its website. Last year, the company’s sales and operating profit amounted to 380.8 billion won and 45.3 billion won, respectively.
Affirma Capital, which was spun out of Standard Chartered PE last year, acquired EMC Holdings, then Kolon Water & Energy, named after its owner Kolon Corporation, another South Korean conglomerate, for $74 million in 2016.
The private equity firm, which now focuses on emerging markets and with AUM exceeding $3.5 billion, did not respond to a request for comment.