South Korea defense and energy conglomerate Hanwha Group is expected to conclude a planned takeover of Daewoo Shipbuilding & Marine Engineering from existing lead shareholder the Korea Development Bank (KDB) in the first half of 2023.
Speaking at a press conference at the close of business on Monday, shortly after the initial deal was announced, KDB chairman Kang Seog-hoon said the bank plans to finalise an agreement with Hanwha during 2022 under which the company will take a controlling 49.3% stake in the shipbuilder by purchasing some $1.39bn in shipyard stocks.
It aims to complete the transaction — which would see KDB’s 55.7% stake slashed to 28.2% — within the first half of 2023.
While Hanwha has been named as the preferred bidder by KDB, the field remains open to others to make competitive bids for the shipbuilder before a 17 October deadline, the KDB boss said.
The Korean Herald reported KDB chairman Kang Seog-hoon as saying: “We have been searching for a buyer with a deep understanding of the business as well as with financial capability, and asked major conglomerates about the takeover plan.
“It was Hanwha Group who expressed willingness to acquire DSME,” he added.
Kang said: “We expect (Hanwha to make) a bold investment in DSME in terms of R&D, which will lead to the overall development of the local shipbuilding industry.”
Hanwha, South Korea's seventh-largest conglomerate, said on Monday that it had signed a conditional memorandum of understanding with DSME.
Under the proposed deal, which comes after long-running and now collapsed efforts to merge DSME with compatriot shipbuilding giant Hyundai Heavy Industries, Hanwha will also have managerial control over the shipyard.
It is expected that the proposed new owner would use the shipbuilder to expand its defence and green energy businesses.
Kang stressed that Hanwha, which also made an attempt to buy DSME in 2008, currently has no shipbuilding business so the sell-off should not run into the same monopoly concerns over LNG carrier construction as the HHI merger plan.
Korean press reports said Hanwha was interested to buy DSME’s defence shipbuilding interests but KDB wanted to sell the entire business, which it has held for over 20 years.
Consultants said the shipyards existing newbuilding deals should not be affected but admitted there is generally no change of control provision in shipbuilding contracts.
DSME shares jumped 13.4% on Monday but Hanwha’s stock slipped back 5.2%.