Hanwha Group will snap up struggling shipyard
South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME) has finally found a new owner _ the country’s Hanwha Group _ after two decades of government control.
Korea Development Bank (KDB) announced on Sept. 26 that the state-backed lender picked Hanwha as a preferred bidder to take part in the 2 trillion won ($1.4 billion) rights offering for a 49.3 percent stake in DSME.
Six Hanwha subsidiaries, including Hanwha Aerospace and Hanwha Systems, are set to channel 2 trillion won ($1.4 billion) to take part in a stalking-horse bidding process.
If a bidder comes up with a price higher than that of Hanwha Group, KDB will ask Hanwha if it can increase the bidding price for DSME, the world’s No. 4 shipbuilder, in terms of order backlog.
“The stalking horse bid may seem complicated. But it means that Hanwha Group will almost certainly acquire DSME,” Prof. Sung Tae-yoon at Yonsei University said.
“I think that KDB made the right decision. DSME can get back on track only through private hands. Hanwha Group will be able to chalk up a synergy effect along with its defense business.”
Hanwha Group is Korea’s No. 7 conglomerate, which focuses on such businesses as defense, energy, and chemicals.
Since 2001, KDB has controlled struggling DSME that received public funds amounting to $2 billion for rehabilitation.
In 2008, Hanwha Group strived to take over DSME at $4.2 billion, but the deal fell apart amid the global financial crisis.
Recently, the world’s top shipbuilder Hyundai Heavy Industries agreed to snap up DSME, but the European Union vetoed the M&A due to worries about supply monopoly.
Hanwha Group’s acquisition of DSME would cause no such concerns, according to observers.
However, some claim that the price of 2 trillion won ($1.4 billion) is too low as more than $2.9 billion was injected into DSME, which suffered losses in 2021 and during the first half of this year.
After the rights offering, KDB said that its stake in DSME would go down from 55.7 percent to 28.2 percent.