South Korea’s defense and energy conglomerate Hanwha Group has signed a $1.5 billion deal for the acquisition of a controlling stake in compatriot shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME).
The troubled shipbuilder has been controlled by the state-run Korea Development Bank (KDB) for over 20 years, with several attempts made over that period to find a buyer falling through.
In line with the terms of the deal, Hanwha will take over 49.3 percent stake in the shipbuilder by acquiring over 104 million newly issued shares while KDB will retain 28.2 percent stake.
The duo signed a tentative takeover deal in September and moved forward with the acquisition after no other bids were submitted.
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.
“With the signing of this contract, Daewoo Shipbuilding & Marine Engineering (DSME) plans to promote early business normalization by improving its financial structure and securing liquidity and will use this as a stepping stone to strengthen and expand synergies with the Hanwha Group in the global defense industry, and the renewable energy sector,” DSME said commenting on the closure of the deal.
DSME has surpassed its yearly target of $8.9 billion worth of orders by 117% standing at $10.4 billion so far this year. The orderbook backlog is predominantly driven by LNG demand pushing LNG carrier tally at DSME to a total of 38 construction projects secured this year, a record for most LNG carrier orders in a single year. The company secured orders for a total of 46 vessels, which apart from LNG carriers include 6 container ships, 1 offshore plant, and 1 depot maintenance vessel.
The deal is pending regulatory approvals.