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HHI signed a preliminary deal to acquire its rival Daewoo Shipbuilding & Maritime Engineering

Logistic News - Published on Thu, 21 Feb 2019

Image Source: IHS Markit
Korea News Plus reported that Hyundai Heavy Industries (HHI) signed a preliminary deal to acquire its rival Daewoo Shipbuilding & Maritime Engineering. The former signed the contract with the state-run Korea Development Bank, which has a 55.7 percent stake in the latter. But experts point out the transaction, which involves the world’s two largest shipyards headquartered in Korea, is not a done deal because it has to get the go-ahead not only from Korean regulators but also those of China and Japan.

Typically, a merger and acquisition (M&A) contract is subject to approval by the anti-trust agency of a certain country. But in the case of mega-sized deals that greatly affect global consumers, other countries also have a say.

In the case of the shipbuilding industry, HHI will have to get the green light from China, Japan, the United States and the European Union, which purchase many ships from HHI and DSME. The two companies’ combined market share would be slightly higher than 20 percent; and while this is not so large, in specific segments such as LNG and container carriers, and oil tankers the figures are much higher.

For instance, the two firms combine to account for more than 80 percent of the market in LNG carriers. And there are recent examples of aborted takeovers attributable to the objections of other countries.

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Posted By : Ratan Singh on Thu, 21 Feb 2019
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