South Korea’s Hanwha Group to invest 2 trillion won for Daewoo Shipbuilding

SOUTH Korea’s Daewoo Shipbuilding & Marine Engineering signed a tentative agreement on Monday (Sep 26) for Hanwha Group to invest 2 trillion won (S$2 billion) in return for a 49.3 per cent stake and management rights in the shipbuilder, the companies and Daewoo’s major stakeholder said.

The agreement, signed with affiliates of Hanwha Group including Hanwha Aerospace, will only be valid if Hanwha is chosen after a period of being open to other bids, Daewoo said in a regulatory filing.

State-run Korea Development Bank (KDB) owns a 55.7 per cent stake in the shipbuilder. If Hanwha is chosen as the final bidder, KDB is expected to see its stake shrink to 28.2 per cent, the bank said.

A previous 2019 takeover attempt of Daewoo by rival Hyundai Heavy Industries was hit with an EU veto in January on concerns that the deal, which would have created the world’s largest shipbuilder, would hurt competition.

KDB has been trying to sell Daewoo in part to tackle overcapacity in the sector.

Daewoo Shipbuilding reported a 577 billion won operating loss in the first half of 2022, extending an operating loss of 1.7 trillion won in 2021, according to a company filing.

“A strategic investor that does not operate in the shipbuilding industry is the only way to solve the problem,” KDB chairman Kang Seog-hoon told reporters on Monday.

Hanwha Group, South Korea’s seventh-largest conglomerate with 80 trillion won in assets, spans energy, defence and financial industries. REUTERS