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Hyundai Heavy inks definitive agreement to acquire DSME

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Hyundai Heavy Industries (HHI) signed a definitive agreement last Friday to acquire Daewoo Shipbuilding & Marine Engineering (DSME), supported by DSME’s main creditor Korea Development Bank (KDB).

A tentatively named Korea Shipbuilding & Offshore Engineering (KSOE) will be established as a sub-holding company spun off from HHI to control the group’s shipbuilding companies including HHI, by transferring its shares in DSME in return for an equity stake in KSOE.

“HHI group’s post-acquisition strategy is, to have its four shipyards, which would now include DSME as the latest addition to the group’s portfolio of shipbuilding business, focused on design, manufacturing and sales activities, which will be controlled by KSOE specialized in R&D and engineering, with a view to taking HHI group’s competitiveness to the next level,” said Kwon Oh-gap, vice chairman and ceo of HHI.

Read more: Hyundai Heavy Industries in talks to buy smaller rival DSME

Among the key declarations made with the signing of the definitive agreement were employment security of DSME workers and continued relationships with DSME’s current business partners.

A joint statement of the two Korea shipyards added that DSME’s management structure will remain unchanged, a joint consultative body will be formed to collect and share opinions from each stakeholder, and procedures will be carried out to minimise any possible vacuum in management as a result of the merger.

The shipbuilders also said that a tentatively named Korea Shipbuilding Industry Development Commission, consisting of industry, government and academia experts, will be formed to restore the shipbuilding industry’s ecosystem.

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