South Korea’s defense and energy conglomerate Hanwha Group will proceed with the acquisition of a majority stake in the compatriot shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) .
The duo signed a tentative takeover deal in September that would see Hanwha Group acquire a 49.3 percent stake from the state-run Korea Development Bank (KDB) in combination with management rights in return for $1.4 billion.
The deal has now been cleared as no other bids were submitted and the stalking-horse bidding process closed on October 17th, DSME said.
Following a six-week due diligence process, a final contract is expected to be signed. Once the deal is finalized, KDB will retain 28.2 percent stake in the shipbuilder.
The debt-ridden shipbuilder has been under state management for 22 years as it struggled to find an investor.
The shipbuilder posted an operating loss of 1.7 trillion won in 2021 and nearly 600 billion won in the first half of 2022, largely due to a 51-day strike at DSME’s yard in Geoje Island staged by subcontractor workers over the summer.
The lifeline offered by Hanwha has enabled DSME to dodge the planned break up of its business into civilian and defense shipbuilding operations which was one of the options mulled by the state earlier.
DSME has surpassed its yearly target of $8.9 billion worth of orders currently standing at $9.4 billion. The orderbook backlog is predominantly driven by LNG demand pushing LNG carrier tally at DSME to a total of 34 construction projects secured this year.