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). If the purchase was to proceed, 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.
Mainly, 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.
[smlsubform prepend=”GET THE SAFETY4SEA IN YOUR INBOX!” showname=false emailtxt=”” emailholder=”Enter your email address” showsubmit=true submittxt=”Submit” jsthanks=false thankyou=”Thank you for subscribing to our mailing list”]
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.
Also, Daewoo shares experienced an increase of 22% on January 31, whereas HHI’s shares decreased by 5% due to concerns on high purchase price.
In the meantime, the potential for reduced competition pushed Samsung Heavy shares up almost 7%.
KDB’s stake reached the 2.16 trillion won ($1.94 billion) worth on January 3 according to analysts.
Based on HHI’s aim to buy DSME, the former’s workers’ union announced that they decided to delay a vote on 2018’s wage deal in a protest, as they believe that the purchase could likely threaten their jobs.
However, despite the allegations, Hyundai Heavy, Daewoo, Samsung Heavy and KDB declined to comment.
Concluding, the shipbuilding industry accounts for 7% of both exports and employment in Asia’s fourth-biggest economy.
