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EU resumes review of Hyundai Heavy-Daewoo Shipbuilding merger, others may follow

All News 17:58 June 05, 2020

By Nam Kwang-sik

SEOUL, June 5 (Yonhap)-- The European Union (EU) has started its review of the proposed merger between two major South Korean shipbuilders, and other countries may speed up their own probes into the deal that could create the world's No. 1 shipyard, industry sources said Friday.

In March, the European Commission (EC), the executive body of the EU, suspended its review of the acquisition of Daewoo Shipbuilding & Marine Engineering Co. (DSME) by its bigger local rival Hyundai Heavy Industries Holdings Co. (HHIH), due to the coronavirus pandemic.

But the EC resumed its investigation into the US$1.8 billion deal this week, with an aim to complete it by early September this year.

This photo shows the emblem of Daewoo Shipbuilding & Marine Engineering (DSME) in front of its Seoul Office. (Yonhap)

The deal needs regulatory approval from six countries -- South Korea, China, Kazakhstan, Japan, European Union and Singapore. Kazakhstan approved the deal in October 2019.

Market watchers said the EU and four other countries are tipped to accelerate their probes into the deal.

But the EU and Singapore have been cautious about the deal, which may hurt shipbuilders in their countries.

Japan has been taking issue with the deal at the World Trade Organization, requesting WTO dispute consultations with South Korea regarding Seoul's alleged subsidies to its shipbuilding industry.

In March 2019, Hyundai Heavy Industries signed a deal to buy a 55.72 percent stake in Daewoo Shipbuilding, in a deal that could create the world's biggest shipbuilder with a 21 percent share in the global shipbuilding market.

In a bid to acquire Daewoo Shipbuilding, Hyundai Heavy Industry Group split Hyundai Heavy Industries into two entities -- Korea Shipbuilding & Offshore Engineering Co. (KSOE), a sub-holding company that governs shipbuilding units under the group and a reorganized Hyundai Heavy Industries Co.

KSOE currently manages the group's three shipbuilding units -- Hyundai Heavy Industries, Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co.

If the acquisition deal goes ahead, Hyundai Heavy Industries Group will have four shipbuilders under its wing -- Hyundai Heavy, Hyundai Samho Heavy Industries, Hyundai Mipo Dockyard and Daewoo Shipbuilding.

This image shows an aerial view of Hyundai Heavy Industries Co., the world's largest shipyard, in Ulsan, 414 kilometers southeast of Seoul. On Feb. 12, 2019, the Korea Development Bank said Hyundai has been chosen as a candidate to buy its smaller local rival Daewoo Shipbuilding & Marine Engineering Co. (DSME). (Yonhap)

ksnam@yna.co.kr
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