Doosan Heavy Acquires 2 billion CZK from Czech Banks to Buy turbine-maker Škoda Power

Doosan Heavy Industries & Construction, with support from WOOD & Company, one of the main M&A and financing advisors, signed a deal for a 2 billion-CZK loan to buy Czech turbine-maker Škoda Power. With Komerční banka acting as s mandated lead arranger, the loan will assure local financing from Česká spořitelna, ČSOB, Komerční banka, Raiffeisenbank, UniCredit Bank and VÚB. The bulk of the total 11.5 billion-CZK (450 million EUR) cost will come from Doosan itself. “We turned to the local financial market because local support is very important in the future growth of Škoda Power,” said one of senior managers for Doosan Heavy’s M&A team.

Doosan’s representatives said the conditions of the financing are very favorable despite the ongoing global crisis and even though the deal is the first between the South Korean company and Czech banks. “The banks decided to support a realistic high-quality business plan and strategy for the future with Doosan Heavy in the position of new owner,” Doosan‘s M&A manager said.

“The interest of local banks to provide funding for the acquisition greatly exceeded the loan needs of the South Korean engineering giant,” said Radek Musil, who was responsible for the deal on the side of WOOD & Company. “In preparing the transaction, Doosan used an innovative financing structure,“ he added.

On the financing, law firms Paul, Weiss, Rifkind, Wharton & Garrison; Kim & Chang; White & Case and Norton Rose advised Doosan Heavy Industries & Construction. The law firm Clifford Chance advised the financing banks.

Doosan Heavy and Škoda Holding signed the contract to buy Škoda Power in September. The Czech Anti-Monopoly Office approved the purchase a month later. Talks about financing the acquisition culminated yesterday. The operation of Škoda Power will remain in the Czech Republic and the Pilsen factory will act as a turbine development center for Doosan.

...Doosan Heavy Industries & Construction was founded in 1962 and today is one of the largest South Korean engineering companies. It produces turbines, generators and boilers for energy companies while also providing all types of power plants; from hydroelectric to nuclear. Doosan Group is already active in the Czech Republic through Doosan Infracore, which owns the maker of Bobcat construction vehicles. Doosan Babcock represents the company in key European markets.

...Škoda Power is a global leader in turbine production. The company, which belonged in the Škoda Holding group at the time, increased revenue by a third to more than 5.6 billion koruna in 2008. This year, the plan is for one billion more. Škoda Power owns valuable turbine technologies, especially in the area of steam generation. The cooperation with Doosan will allow the company to increase profitability of turbine generation production and open the fast-developing Asian markets.

...WOOD & Company, the leading investment bank in the region of Central and Eastern Europe, is owned for the most part by its local partners, Chairman of the Board Jan Sýkora, Andrea Ferancová, Vladimír Jaroš, and Lubomír Šoltýs. Headquartered in Prague, the firm has gained over its 15 years of existence, a deep understanding of the markets of the new EU countries. WOOD & Co provides its international and domestic clients with top quality investment banking, stock-broking services and M&A.