South Korean shipbuilder Samsung Heavy Industries (SHI) denied in a stock exchange filing that merger talks with its affiliate Samsung Engineering had been relaunched.
The move was backed by Samsung Engineering, which also issued a similar announcement saying that “the merger was not being considered.”
The two companies rushed to deny rekindled merger talks that sparked a rise in the companies’ shares on Wednesday following Samsung Engineering CEO Park Jung’s claims that the merger was back on the table.
“Samsung Engineering will seek a merger with Samsung Heavy,” Park was quoted as saying on Wednesday by Korea Times, while speaking to reporters on the sidelines of a meeting of Samsung affiliates’ presidents.
According to him, the merger would be a move in the right direction as it would help boost the group’s competitiveness and streamline its business operations. This particularly relates to sharing of Samsung Engineering’s engineering and project management capabilities with Samsung Heavy. However, potential time frame and details on the merger ratio had not been disclosed.
The previous attempt of a merger between SHI and Samsung Engineering was binned in November 2014, as shareholders opposed the move.
Namely, the shareholders voiced their concern that the USD 2.5 billion deal exceeded the agreed amount of stock purchase ceiling adding that, as a result, it could be damaging to shareholder value.
The merger had been decided in September, the objective being creation of a “world-class total solution provider for shipbuilding and onshore and offshore services.” The merger ratio was supposed to be fixed at 1:2.36.
Samsung Engineering, which focused its business in onshore hydrocarbon plants, was supposed to diversify into high value-added projects such as onshore LNG and offshore plants by securing Samsung Heavy Industries’ offshore plant fabrication capabilities.
The merger was intended to give the two companies a chance to become a global top-tier EPC (Engineering, Procurement and Construction) company.
World Maritime News Staff