Mega-merger between HHI and DSME receives regulatory approval
The mega-merger between South Korean shipbuilding majors Hyundai Heavy Industries Group and Daewoo Shipbuilding will be approved by regulators.
According to BusinessKorea, HHI Group will have to move its LNG shipbuilding technology to medium-sized shipbuilders like STX Offshore & Shipbuilding and Hanjin Heavy Industries.
Hyundai said at the start of this year that it plans to complete its acquisition of its smaller competitor by the end of the first half of 2021.
HHI will take over Geoje-based DSME from Korean state lender KDB, which holds a majority stake in the business with a 55.7 percent stake. The procedure, however, must obtain approval from a number of regulatory bodies, including the European Commission.
Since 2019, the EU has been conducting a thorough investigation into the merger's approval.
The EU regulatory body expressed concerns at the time that the proposed deal will eliminate DSME as a major competitor in the markets for large containerships, oil tankers, LNG carriers, and liquefied petroleum gas (LPG) carriers.
It also stated that the remaining shipbuilders would most likely not exert enough competitive pressure on the merged entity in the four markets affected by the merger, and that the customers would not have enough negotiating power to prevent the merged entity.
As a result, the acquisition deadline was extended at the end of January by Korea Shipbuilding & Offshore Engineering (KSOE), a shipbuilding holding company of Hyundai Heavy Industries Group, due to regulatory delays.
After KSOE signed a contract extension with DSME on January 22, 2021, the deadline was pushed back from September 2020 to June 2021.
The $1.8 billion merger has received regulatory approval in China, Singapore, and Kazakhstan, with approvals also pending in South Korea, Japan, and the European Union.
Maritime Business World