South Korean conglomerate Hanwha Group has signed a conditional investment agreement with compatriot Daewoo Shipbuilding & Marine Engineering (DSME) to acquire a controlling stake of 49.3% and managerial control of the shipbuilder through a $1.4bn capital increase.
The state-run Korea Development Bank (KDB), which has controlled DSME for 21 years, agreed to sell part of its stake and would keep a 28.2% shareholding in the shipbuilder if the deal goes through. KDB currently holds a 55.7% stake in DSME.
The KDB sought to sell off DSME to its rival Hyundai Heavy Industries, but the deal fell through earlier this year as the European Union ruled against the merger, claiming the move would create a dominant construction force in the LNG carrier market.
Hanwha, which has no shipbuilding businesses, has now been selected as a preferred bidder. However, any investor with more favourable conditions can enter the competitive bid before the deadline on October 17. KDB and Hanwha said they expect to forge a formal agreement by the end of November this year and to complete the transaction within the first half of 2023.
This is Hanwha’s second move on DSME after its first attempt to purchase the financially troubled shipbuilder failed in 2008. The group is South Korea’s seventh-largest conglomerate specialised in defense and energy with DSME one of South Korea’s top builders of naval ships.