The mega-merger between Hyundai Heavy Industries (HHI) and DSME is "unrealistic" due to competition concerns, according to a Korean analyst.
Moo-hyun Park of Hana Financial Group believes the $1.8bn deal is already "on the skids", despite it being confirmed this week after rival Samsung declined to bid for Korea Development Bank's holding in DSME.
Park assessed the total market share of both yards in terms of LNG carriers and VLCCs as around 60% globally, and said it would be difficult to secure competition clearance.
"There will be no synergy effect of the merger bid," he added. "It will not be helpful to the Korean shipbuilding industry."
DSME would become a subcontracting factory like HHI's Gunsan yard, he added.
Park said a "professional executive system which will utilise DSME’s wonderful technology is the right answer for DSME and the future of Korean shipbuilding industry."
"The unrealistic merger bid between HHI and DSME will put a lot of shipowners on edge," he added.
