Posco's Case for a Takeover

Korea's steel giant faces fierce competition from China while it's boom time for steel-buyer Daewoo Shipbuilding, which may soon be for sale

The persistent market chatter that South Korean steel giant Posco (PKX) is mulling a takeover of Daewoo Shipbuilding & Marine Engineering underscores two divergent trends in the global heavy industries arena. The steel sector is suffering from a glut of gargantuan proportions, thanks to a flood of exports from China. On the other hand, Korea's world-leading shipbuilders are experiencing an order backlog that will keep them busy until near the end of the decade. So wouldn't it make sense for a cash-rich steelmaker like Posco to buy a shipbuilder, secure a captive buyer of its products, and slip out of its current jam?

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