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| Published：2019.07.25 News Sources：Qingdao Gute Ship Supplies Co., Ltd. Views： | |||
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Hyundai Heavy Industries' acquisition of Daewoo Shipbuilding officially submitted an application to China
According to the Korean media report, Korea Shipbuilding & Offshore Engineering (KSOE), a newly established subsidiary of Hyundai Heavy Industries Group, said on July 22 that it submitted an application for merger review through a Chinese local consulting company. It is expected that the Chinese government will spend up to 120 days to investigate whether Hyundai Heavy Industries Group's acquisition of Daewoo Shipbuilding will hinder global competition. South Korean industry insiders believe that China's State Market Supervisory Administration is unlikely to oppose the merger of Hyundai Heavy Industries and Daewoo Shipbuilding, considering that China's two major shipbuilding groups are also preparing for restructuring. Previously, Hyundai Heavy Industries Group had selected the Korea Fair Trade Commission (FTC), the European Union, Japan, China and Kazakhstan as its assessment agencies for the merger with Daewoo Shipbuilding. On July 1, Hyundai Heavy Industries announced that it has submitted an application to the Korea Fair Trade Commission, which is expected to last for a maximum of 120 working days. In addition, since April, Hyundai Heavy Industries has been discussing the merger with EU regulators to prepare for approval. In general, the EU's antitrust review will be divided into two phases, and the entire process will often take several months. Hyundai Heavy Industries is currently negotiating with the EU because the EU requires applicants to conduct pre-trials before submitting applications for review. In March of this year, Hyundai Heavy Industries Group signed an acquisition agreement with Korea Industrial Bank, a major shareholder of Daewoo Shipbuilding, to acquire a 55.7% stake in Daewoo Shipbuilding owned by Korea Industrial Bank. The value is expected to exceed 2 trillion won (approximately 1.762 billion U.S. dollars) and is expected to become The largest acquisition in the history of the Korean shipbuilding industry. As the first step of Hyundai Heavy Industries Group's acquisition of Daewoo Shipbuilding, Hyundai Heavy Industries established the second-level holding company Korea Shipbuilding Marine Co. on June 3. According to the plan of Hyundai Heavy Industries, KOSE headquarters will be located in Seoul, and will lead four shipbuilding companies: Hyundai Heavy Industries, Daewoo Shipbuilding, Hyundai Sanhu Heavy Industry and Hyundai Miura Shipbuilding. According to statistics from Clarkson at the beginning of this year, after the merger, Hyundai Heavy Industries Group and Daewoo Shipbuilding will have an overall hand-held order volume of 365 ships and 17 million CGTs, accounting for more than one-fifth of the total global handheld orders, with a market share of 21.2. %. The total market share of VLCC and LNG ships has reached 72.5% and 60.6% of the global market share, respectively, and this may become a controversy in the monopoly shipbuilding industry. Therefore, for Hyundai Heavy Industries and Daewoo Shipbuilding, winning the approval of anti-monopoly agencies in various countries has become a huge obstacle. The merger of Hyundai Heavy Industries and Daewoo Shipbuilding must pass anti-monopoly review in five countries including South Korea, the European Union, Japan, China, and Kazakhstan. As long as one country opposes, the transaction may end in failure. Korean shipbuilders predict that Japan and the EU will be the biggest obstacles to achieving the merger. In this regard, Hyundai Heavy Industries said it will work closely with the government to promote it. Zhao Yongzhe, the chief financial officer of Hyundai Heavy Industries, said recently that the internal evaluation believes that the M&A review can be completed. The company will try to end the review within the year and complete the integration and reorganization of Hyundai Heavy Industries and Daewoo Shipbuilding.
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