South Korea’s GS Engineering & Construction Corp. (GS E&C) is in talks to sell its entire stake in GS Elevator Co. to a Chinese strategic investor, people familiar with the matter said on Wednesday.
According to investment banking industry sources, GS E&C could sell half of its entire stake to the unidentified Chinese firm and then jointly manage the elevator maker if conditions are met.
If all goes to plan, the two sides aim to conclude the deal by the end of this year, sources said.
One of the sources said that the Chinese company is seeking a foothold in the Korean elevator market after its overseas business was stunted due to protracted US-China trade disputes.
According to sources, the Chinese company with about 10 trillion won ($7.4 billion) in assets showed interest in GS Elevator, which it plans to use as a non-Chinese base to resume its global elevator business.
GS Engineering & Construction's logo Korea is the world’s third-largest elevator producer with an annual production volume of 40,000 units, after China and India.
In Korea, Hyundai Elevator Co. is the top player, followed by Germany’s TK Elevator GmbH, formerly known as ThyssenKrupp Elevator, and Otis Worldwide Corp., known as Otis Elevator. The big three control 80% of the Korean elevator market.
Japan's Mitsubishi Electric Inc. ranks fourth and GS Elevator ranks fifth.
GS E&C ALSO MULLS SALE OF GS INIMA IN SPAIN
GS E&C acquired GS Elevator in 2021 to enter the domestic elevator market.
The construction company has since invested nearly 100 billion won in the elevator affiliate.
GS Elevator (Screenshot captured from its website) GS Elevator posted an operating loss of 16.1 billion won on sales of 34.1 billion won in 2023. The company operates two plants – one in Asan, Korea, and the other in Vietnam.
Its construction business has been reeling since being banned by the government from construction work for eight months from April due to the collapse of an apartment construction work in which it was involved in Incheon, near Seoul, last year.
GS E&C is also seeking to sell its Spanish water treatment subsidiary GS Inima Environment SA.
The Spanish company is a profitable subsidiary, accounting for 15% of GS E&C's annual operating profit.
The value of GS Inima Environment SA is estimated at some 2 trillion won.
