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

Hanwha Group building [Courtesy of Hanwha Group]

South Korea’s Hanwha Group signed an agreement with Korea Development Bank (KDB) on Friday to acquire a controlling stake in Daewoo Shipbuilding & Marine Engineering Co. (DSME) for 2 trillion won ($1.5 billion) in a deal that will allow the conglomerate to strengthen its defense business portfolio.

Hanwha Group will inject 2 trillion won in new funds for a 49.3 percent stake in DSME after it receives approvals from anti-trust agencies at home and abroad.

Six Hanwha Group affiliates will buy the new shares - 1 trillion won will come from Hanwha Aerospace Co., 500 billion won from Hanwha Systems Co., 400 billion won from Hanwha Impact Partners and 100 billion won from three Hanwha Energy Corp. units.

The final contract comes after Hanwha Group and KDB, the main creditor of DSME, signed a memorandum of understanding in September. Hanwha Group exclusively conducted due diligence on DSME from October. The conglomerate has not found obstacles that would hinder the DSME purchase.

It is Hanwha Group’s second attempt to buy DSME, the world’s third-biggest shipbuilder.

The conglomerate was named as the preferred bidder to buy DSME in 2008 and asked KDB if it can make payment in installments in the wake of global financial crisis. KDB rejected the request and the deal was called off.

Hyundai Heavy Industries Co. tried to buy DSME in 2019 but the deal fell apart after the European Union vetoed the merger of the two shipbuilders citing concerns about their dominance in the sector.