KDB Investment, a controlling shareholder of Daewoo Engineering & Construction have picked Jungheung Group, a local construction company, as a preferred bidder for acquiring the country‘s sixth-largest builder, the proposed seller said Monday.

The announcement sets the stage for Jungheung to further negotiate with KDB Investment, which holds 210.9 million common shares, or a 50.75 percent stake, in Daewoo E&C.

The Jungheung-led consortium outbid the investor group of builder DS Networks and private equity firm SkyLake Equity Partners. KDB Investment did not disclose the proposed acquisition prices.

KDB Investment focused on the “sincerity of the proposed buyers,” to avoid a repeat of its failed attempt to sell the company to Hoban Group in 2017, KDB Investment Chief Executive Officer Lee Dae-hyun told reporters in a virtual press conference.

Lee added the preferred bidder does not intend to sell Daewoo E&C’s overseas business and had “concrete” financing plan to acquire the company, declining to comment further due to confidentiality.

Lee has been named as an outside board member of Daewoo E&C, since December 2020. 

The remark came after the consortium, composed of Jungheung and investment bank Mirae Asset Securities, submitted a letter of intent to participate in the bid.

Daewoo E&C has been effectively under the control of the state-run Korea Development Bank since Daewoo Group disbanded in 1999. Kumho Asiana Group, the former owner of the nation‘s second-largest air carrier Asiana Airlines, controlled Daewoo E&C for four years from 2006. But KDB, the creditor of Kumho Asiana Group, regained the control of the builder in 2010 as part of restructuring efforts for the debt-ridden conglomerate.

The KDB in 2019 handed over its control over the local builder to its subsidiary KDB Investment.

Daewoo E&C recorded an operating profit of 558.3 billion won ($493.6 million) in 2020, up 53.3 percent from the previous year.

Daewoo E&C was trading at 7,890 won a share on the Korea Exchange at the close of trading Monday. That put its market cap stood at 3.3 trillion won.

Jungheung, the country’s 47th-largest business conglomerate, based in Gwangju, was holding total assets worth 9.2 trillion won as of 2020, according to the Korea Fair Trade Commission. The builder is the parent company of Herald Corp., publisher of The Korea Herald.