South Korean defence and energy conglomerate Hanwha Group has signed an agreement to take over a controlling stake in Daewoo Shipbuilding & Marine Engineering for KRW 2 trillion ($1.4bn).
DSME announced the contract had been inked in a regulatory announcement on Friday.
In September Hanwha, South Korea’s seventh-largest conglomerate, signed an initial agreement to buyout a 49.3% stake in the shipbuilder by purchasing some $1.39bn in shipyard stocks.
The transaction would see existing shareholder Korea Development Bank’s (KDB) existing 55.7% stake slashed to 28.2% — within the first half of 2023.
KDB and the Export-Import Bank of Korea have agreed to extend soft loans to the company for a short period following the buyout.
At the time Hanwha management said the deal is expected to be completed by mid-2023.
According to the filing, the takeover deal still needs to be approved by foreign competition regulators, including in the European Union, Japan, China and Singapore.
The Hanwha buyout comes after numerous efforts by KDB to shed its shareholding in DSME.
The most recent of these was a long-running effort by compatriot shipbuilding giant Hyundai Heavy Industries to takeover its smaller rival. But the bid was scuppered by competition concerns, particularly in relation to LNG carrier construction.
Hanwha, which will also have managerial control over DSME, also made an earlier attempt to buy the shipbuilder in 2008.
The conglomerate has around KRW 80 trillion in assets spread across the energy, defence and financial industries.
It is expected that the proposed new owner would use the shipbuilder to expand its defence and green energy businesses.
- 1973: Okpo shipyard built by Korea Shipbuilding & Engineering Corp
- 1978: Company becomes Daewoo Shipbuilding & Marine Engineering
- 1991: Daewoo Shipbuilding posts its first-ever profit
- 1999: Enters into workout programme after Asian crisis, Korea Development Bank (KDB) emerges as major shareholder.
- 2000: Daewoo Shipbuilding spun off from Daewoo Group
- 2001: Workout programme completed
- 2002: European Commission makes complaint to World Trade Organization (WTO) over corporate restructuring subsidies
- 2008: Hanwha Group bids for the company as KDB looks for buyer
- 2020: Japan complains to WTO over subsidies after second restructuring
- 2021: Proposed merger with Hyundai Heavy Industries blocked by European Union
- 2022: Strike disrupts production for more than 50 days
- 2022: Second Hanwha $1.4bn bid accepted
- 2023: South Korea's Fair Trade Commission approves Hanwha's acquisition of DSME
