South Korean shipbuilding major Hyundai Heavy Industries (HHI) has signed an official contract with Korea Development Bank (KDB) today for the takeover of Daewoo Shipbuilding & Marine Engineering (DSME).
In January, HHI signed a conditional agreement with KDB to acquire the controlling stake in DSME.
Under the agreement, HHI will create a holding company to control its shipbuilding business after the takeover. HHI will be the largest shareholder of the holding company, controlling a 26% stake while KDB will be granted a 18% stake in the company, becoming the second largest shareholder.
Following the takeover, the major shareholders of DSME including HHI, KDB, National Pension Service (NPS) and KCC will jointly replenish KRW1.5 trillion ($1.3bn) of capital into the company.
Lee Sung-keun, head of shipyards at DSME, has been nominated to take the role of CEO to replace Jung Sung-leep.
The combination of the two shipbuilders would create one of the largest shipbuilding conglomerates in the world, controlling over 20% of the world’s orderbook.
HHI said last month that the aim of the merger is to enhance the overall competitiveness of the South Korean shipbuilding industry.
HHI’s takeover of DSME has been facing strong oppositions from unions of both yards as they worry that the merger will lead to massive layoffs.
Hundreds of union workers had a run-in with police at a protest in front of the KDB building today, after attempting to enter into the building to block the signing ceremony.