Hyundai Heavy Industries’ plan (HHI) to acquire Daewoo Shipbuilding & Marine Engineering (DSME) is experiencing difficulties, as union members of the two shipbuilders decided to start a strike to oppose to the possible takeover.
Namely, according to local media, the two unions protested in front of Korea Development Bank (KDB) headquarters, which is DSME’s largest stakeholder and creditor. This came only a day after, the HHI union went also strike to oppose the plan.
The reason why the unions oppose, is that the acquisition is possible to lead to layoffs across overlapping jobs in the design, sales and research departments.
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According to the KDB, it will hand over its 55.7 percent stake in DSME to a new corporate body that will be set up by HHI. In return, the lender will receive stock in the new entity worth 2.1 trillion won.
Now, both unions will go on a joint strike, which will take place during March, when KDB and HHI will sign the deal for the takeover.
South Korean Hyundai Heavy Industries, the biggest shipbuilding group globally, expressed its interest on buying, the second-placed, Daewoo Shipbuilding and Marine Engineering Co Ltd (DSME), during January. If the purchase proceeds, HHI would control more than 20% of the global market, according to Reuters. Also, Korea Development Bank (KDB), the biggest shareholder of DSME, reported, on January 31, that it has signed a conditional deal with Hyundai Heavy Industries Group to sell Daewoo shares.
HHI’s decision comes as the shipbuilding field recovers from a global economic fall, that resulted to job cuts in 2017, a $2.6 billion bailout of Daewoo Shipbuilding & Marine Engineering Co Ltd.
Hyundai Heavy has issued a letter of intent to KDB to purchase a part of Daewoo, as stated by Yonhap Infomax.
The bank noted in a statement that it signed a MoU with Hyundai that includes liquidity support of 2.5 trillion won ($2.25 billion) for Daewoo. Additionally, the bank owns a 55.7% part of Daewoo.
