HHI agrees DSME takeover deal with Korea Development Bank

South Korean shipbuilder Hyundai Heavy Industries has signed the formal deal with Korea Development Bank to complete the purchase of its compatriot Daewoo Shipbuilding & Marine Engineering.

Image courtesy of DSME

The new deal valued at around 2 trillion won ($1.8 billion) will see the state-owned KDB that has a 55.7 percent stake in DSME, hand over 59,738,211 shares priced at 34,922 South Korean won, HHI said in a regulatory filing.

Under the agreement, KDB will also acquire 1.5 trillion won worth of shares in Hyundai Heavy once these are issued at a later date. For this transaction, Hyundai Heavy Industries will be split into two companies, one of which will be listed on the market.

Should the deal formalize, Hyundai Heavy Industries Holding will have a 26 percent interest in the newly formed entity with KDB owning 18 percent.

According to VesselsValue, the merger would consolidate a significant portion of the outstanding order book of LNG vessels even though it goes beyond this market segment.

The merger would double the outstanding order book of HHI from $6 billion to over $12 billion.

The HHI group is already the dominant shipyard in terms of value on order, but the addition of the DSME orders would further cement their position as the world’s leading builder, VesselsValue said, noting that Samsung Heavy Industries remains a significant competitor.