Hanwha Group close to signing final deal to buy world’s third-biggest shipyard

DSME ROKS Dosan Ahn Changho (SS-083) [Source : Cheong Wa Dae photo pool]

South Korea’s seventh largest conglomerate Hanwha Group has moved a step closer to becoming a civil defense power commanding land, air and sea with the planned acquisition of Daewoo Shipbuilding & Marine Engineering Co.

Hanwha Group is expected to sign a final agreement on Dec. 12 to buy a 49.3 percent stake and management rights in the world’s third-largest shipbuilder at an estimated 2 trillion won ($1.5 billion) rights offering, according to investment banking and shipbuilding industry sources on Wednesday.

It has recently completed its due diligence and initiated a final legal review.

The preliminary agreement was signed in September. Since then, the group conducted a six-week due diligence on DSME. Nothing out of the ordinary has been found during the review and the sale price is expected to remain unchanged at 2 trillion won.

Hanwha Group is also confident about financing for the acquisition. It has offered to buy new common shares issued by DSME, which will be taken up by its affiliates. Hanwha Aerospace Co. will put up 1 trillion won, Hanwha Systems Co. 500 billion won, Hanwha Impact Corp. 400 billion won, and three Hanwha Energy units 100 billion won.

Hanwha will file for antitrust reviews at home and abroad in hopes to complete the acquisition within the first half of next year.

With DSME under its wing, Hanwha Group will be able to diversify its business portfolio to shipbuilding, adding to solar energy, civil defense and finance. Aside from commercial vessels, the shipyard also builds warships and submarines for the military in South Korea and other countries. It can immediately bolster competitiveness in defense business by establishing an integrated defense system for land, sea and air security.

The group’s total assets will increase to more than 90 trillion won, nearing the country’s No. 6 POSCO Group’s 96.3 trillion won. As DSME has won orders for liquefied natural gas carriers since 2020, financial burden on the group after the acquisition will likely be eased as Korean shipyards dominate this sector.