Hanwha's takeover of DSME gets near finish line

Hanwha Group closed a deal to acquire a controlling stake in Daewoo Shipbuilding and Marine Engineering (DSME) on Friday.

A crane at Daewoo Shipbuilding and Marine Engineering's shipyard in Geoje, South Gyeongsang. [YONHAP]

Hanwha Group closed a 2-trillion-won ($1.5-billion) deal to acquire a controlling stake in Daewoo Shipbuilding and Marine Engineering (DSME) on Friday.

The closing came three months after it was named the preferred bidder for the takeover.

On Friday, the government held a meeting chaired by Finance Minister Choo Kyung-ho to approve Hanwha’s acquisition of DSME, the troubled shipbuilder that has been controlled by state-run Korea Development Bank (KDB).

KDB held a 55.7 percent stake in DSME.

As DSME will issue 104,438,643 new shares, Hanwha will be the new largest shareholder with a 49.3 percent stake. KDB’s stake will shrink to 28.2 percent.

The acquisition is expected to be completed by the first half of next year.

The remaining process includes receiving approvals for corporate consolidation from the Fair Trade Commission and overseas regulators in the European Union, Singapore, Japan, China and others.

DSME was on the verge of being sold to Hyundai Heavy Industries earlier this year, but European regulators rejected the deal on grounds that the company would monopolize the high-end liquefied natural gas carrier market.

As Hanwha was not in the shipbuilding business, concerns over a potential monopoly are not likely.

The conditions of the deal also include the resignation of DSME's board directors.

Hanwha companies will make joint investments for the takeover once the regulatory approval process is complete.

Hanwha Aerospace will be investing 1 trillion won for half of the stake in the company. Hanwha Systems will be investing 500 billion won, Hanwha Impact Partners, a fund, 400 billion won and Hanwha Energy 100 billion won.

It is the first time that DSME has been in private hands since a government-led debt workout in 2001.

“With the signing of the deal, DSME will improve our financial structure and secure liquidity to quickly normalize business management, creating synergy with Hanwha Group in the defense and renewable energy sectors,” said DSME in a release Friday.

This was Hanwha’s second attempt to acquire DSME, after a failed bid 14 years ago.

In 2008, Hanwha companies offered to buy DSME for 6.3 trillion won before the global financial meltdown. The deal fell through as DSME employees resisted the sale and funding became difficult during the crisis.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]