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| Daewoo E&C's unionized workers hold a rally at their company's headquarters building in Seoul, Monday, to prevent Jungheung Group's underwriters from entering their office. Courtesy of Daewoo E&C union |
By Park Jae-hyuk
Jungheung Group is facing growing uncertainties over its ongoing attempt to complete the acquisition of Daewoo E&C, due to intensifying protests from the latter's unionized workers, who asked the buyer to sign a written agreement ensuring independent management.
Earlier this week, the unionized workers barred Jungheung's underwriters from entering their office inside the Daewoo E&C headquarters building in Seoul, following their declaration last week that the workers will go all-out to fight against the buyer. They have also continued to hold a rally in front of Jungheung's headquarters in the southwestern city of Gwangju to request job security.
The Daewoo E&C union urged Jungheung's management not to hire top executives from other companies nor to sell the company's assets after the takeover.
Jungheung promised to guarantee Daewoo E&C's independent management and improve labor conditions, at the time it signed a contract with KDB Investment last December to acquire a controlling 50.75-percent stake in the debt-ridden builder.
"In order for Daewoo E&C employees to display their abilities, I will ensure their promotions," Jungheung Chairman Jung Chang-sun said last month. "Through sincere negotiations with the union, I will also look for ways for co-prosperity between labor and management."
However, the Gwangju-headquartered builder has remained reluctant to sign a written agreement, saying it does not have any legal right as the largest shareholder of Daewoo E&C, unless the acquisition deal is completed.
"We cannot allow Jungheung's underwriters to open their office inside of the Daewoo E&C headquarters building and interfere in our management under the pretext of 'post-merger integration,'" the Daewoo E&C union said.
Despite the union's protests, Jungheung seeks to finish the acquisition procedure as planned, but the conflict can be viewed by market participants as a potential risk to the builder.
If, in the worst-case scenario, Jungheung drops its bid to acquire Daewoo E&C, the Korea Development Bank will suffer another failure in its attempt to restructure the nation's key industries, in addition to the recently canceled sale of Daewoo Shipbuilding & Marine Engineering to Hyundai Heavy Industries.
