South Korean regulator to end review of HHIC-DSME merger

South Korean competition regulator has decided to end the review process of Hyundai Heavy Industries Holdings’ (HHIC) acquisition of Daewoo Shipbuilding & Marine Engineering (DSME).

South Korean
Photo: HHI

Hyundai Heavy withdrew its merger review proposal after the European Commission (EC) vetoed the mega-merger deal on 13 January 2022.

Accordingly, the review process will now be terminated, the Korea Fair Trade Commission (KFTC) said in a statement.

On Thursday, the EC adopted a decision to prohibit the proposed business combination between the two South Korean shipbuilding companies.

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The EU decision is based on the conclusion that the merged shipbuilding giant would create a dominant position and reduce competition in the global market for the construction of LNG carriers.

HHI and DSME hoped to receive the EU regulatory approval under the condition that HHI transfers its LNG shipbuilding technology to the medium-sized shipbuilders as STX Offshore & Shipbuilding and Hanjin Heavy Industries. 

The EU merger blockage is now a major hurdle for Hyundai Heavy Industries to proceed with the deal, although it previously secured approvals from regulatory bodies in China, Singapore and Kazakhstan.

Unveiled in 2019, the $1.8 billion merger plan included HHI’s takeover of DSME from Korean state lender Korea Development Bank (KDB), the majority shareholder owning a 55.7 percent stake in the company.