Hyundai Heavy Industries (HHI) is seeking to acquire Daewoo Shipbuilding & Marine Engineering (DSME). If this happens, the world's top and second largest shipbuilders will be merged to create the world's largest shipyard.
According to related industry sources, HHI recently discussed the acquisition of DSME with Korea Development Bank(KDB), the largest shareholder of DSME holding 55.7 percent of the shares.
"It is true that we have discussed with KDB to acquire DSME. At this point, however, it is difficult to disclose the specifics," said a HHI official. KDB will hold a board of directors' meeting after consulting with the financial authorities on Jan. 31 to present and discuss the issue of the sale of DSME.
The acquisition of DSME by HHI is expected to improve the competitiveness of Korean shipbuilders in the global market.
According to Clarkson, a British shipbuilding and shipping analysis firm, HHI Group with 11,145 CGT (compensated gross tonnage) was the first to win orders at the end of last year, and DSME ranked the second with 5,844 CGT.
If the orders received by the two companies are combined, it will reach 16,989 CGT, which is three times that of Imabari (5243CGT) of Japan. Samsung Heavy Industries, Korea`s third largest shipbuilder, has 4,723 CGT orders.
"It is estimated that HHI has enough money to finance the project. As DSME has made surplus for two consecutive years since 2017, and the global shipbuilding industry is showing a clear recovery, chances are high that the acquisition will be made," a source from the shipbuilding industry said.
However, resistance from labor unions is seen as a challenge. If the two companies are merged, there is a high possibility of further restructuring work being carried out. In addition, the DSME union is expected to demand job security and opposes the acquisition.
