South Korea’s Hanwha Group announced on September 26 that it has reached a preliminary agreement with Daewoo Shipbuilding and Marine Engineering (DSME), one of South Korea’s largest commercial and naval shipbuilders, to acquire a 49.3% stake and management rights (1.4 billion won) for 2 trillion won. Dollar).
Under a conditional memorandum of understanding (MoU) signed by the two companies, six subsidiaries of the Hanwha Group – including Hanwha Aerospace Defense – have been designated as preferred bidders. However, this will only be legally binding if Hanwha maintains its lead in further competitive bids by October 17.
The stakes will be bought primarily from the government-owned Korea Development Bank (KDB), Daewoo Shipbuilding’s main creditor, whose stake in the shipyard will be reduced to about 28.2 percent from its current 55.7 percent controlling stake. Hanwha said a formal acquisition agreement is expected to be announced in November and the transaction is expected to close in the first half of 2023.
Despite years of financial troubles, Daewoo Shipbuilding has successfully built large surface combatants and advanced diesel-electric submarines for the South Korean Navy (RoKN) along with its rival Hyundai Heavy Industries (HHI). The company has also won naval export deals in Indonesia, Thailand, the Philippines and the United Kingdom.
HHI’s earlier attempt to buy DSME from KDB in a relatively high-priced merger deal failed in January after the European Commission blocked the deal, citing competition concerns in the liquefied natural gas (LNG) carrier market.
Hanwha also attempted to acquire DSME in a $4.6 billion deal in 2008. The offer was subsequently accepted by KDB, but the transaction was terminated as the parties failed to agree on payment terms.
If the latest acquisition bid is successful, Hanwha Group will be able to leverage its new naval shipbuilding capabilities as well as its existing portfolio of defense products, such as ship combat management systems, to provide turnkey naval solutions to South Korean and international customers.
by Jr Ng
