Hanwha Group Moves to Acquire Daewoo Shipbuilding & Maritime Engineering
Hanwha Group Moves to Acquire Daewoo Shipbuilding & Maritime Engineering

Hanwha Group Moves to Acquire Daewoo Shipbuilding & Maritime Engineering

Daewoo Shipbuilding & Marine Engineering Co. (DSME) signed a preliminary investment deal with Hanwha Group on Monday, in a move that could put the embattled shipyard in the latter’s hands. After the rights issue, the state lender will still hold a 28.2 percent stake in DSME. Under a memorandum of understanding, Hanwha Aerospace and other Hanwha subsidiaries will participate in DSME’s 2 trillion-won (US$1.4 billion) rights offering for a 49.3 percent stake and managerial control, said the state-run Korea Development Bank (KDB), DSME’s biggest shareholder. The KDB will discuss with other creditors measures to smoothly lure investments from Hanwha, the country’s seventh-largest conglomerate in South Korea, and put DSME back on track.

The preliminary bidder suggests its price ahead of an open auction, and other bidders submit their prices later. The KDB will announce a public bid for DSME on Tuesday and potential investors will be given three weeks to carry out due diligence on the shipbuilder. The state lender was stepping up efforts for the speedy sale of DSME, which could be a way of salvaging DSME, the world’s No. 4 shipbuilder by order backlog. The KDB has made multiple attempts to privatize DSME since 2001 but failed due mainly to disagreements over price. The state lender and other creditors have injected 4.2 trillion won into DSME since 2015, when the shipyard was hit by a deceptive accounting scandal. The deal comes as DSME has remained stuck in the red for the past two years, despite strong overseas orders.

DSME has been at the center of history with submarines of the Korean Navy.

Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME) is one of the “Big Three” shipbuilders of South Korea, along with Hyundai and Samsung. Started in 1973 at Okpo Bay, Geoje Island, located on the southeastern tip of the Korean Peninsula, the shipyard of DSME was completed in 1981. DSME has since grown into the world’s premium shipbuilding and offshore contractor who is specialized in building various vessels, offshore platforms, drilling rigs, FPSO/FPUs, submarines, and destroyers. The shipyard which spans an area of 4.9 million meters squared encompasses the world’s largest dock with a million-ton capacity and is optimized for building high-tech motor vessels using cutting-edge equipment, including a 900-ton goliath crane.

Hanwha Group is a large business conglomerate (chaebol) in South Korea. Founded in 1952 as Korea Explosives Co., the group has grown into a large multi-profile business conglomerate, with diversified holdings stretching from explosives, their original business, to retail and financial services. In 1992 the company adopted its abbreviation as its new name: “Hanwha”. Hanwha Group is a large business conglomerate in South Korea. Founded in 1952 as Korea Explosives Co., the group has grown into a large multi-profile business conglomerate, with diversified holdings stretching from explosives, their original business, to retail and financial services.