Three Asian nations green light Hanwa’s acquisition of DSME

South Korea’s Hanwha Group has received approval from three Asian nations for its planned acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) after Hyundai Heavy Industries last year failed in its takeover bid.

Singapore, China and Vietnam last week gave their blessing for Hanwha to acquire for $1.5 billion a significant stake in DSME from the Korea Development Bank. These approvals add to those earlier obtained from the UK, Japan and Turkey.

However, the deal could still be scuppered by the European Union or South Korea’s Fair Trade Commission (FTC). The EU is due to deliver its decision on 18 April, reported Upstream’s sister publication Tradewinds.

The FTC began its review of the takeover plan on 19 December. Deliberation on such matters in South Korea usually takes about a month although it can be extended up to 120 days, according to South Korea’s Yonhap news agency.

Last September, Hanwha signed a memorandum of understanding with DSME to acquire 49.3% of the shipyard’s shares through a paid-in capital increase from the KDB, and in December a firm deal was inked, subject to the relevant approvals from anti-competition agencies in key markets.

The Competition and Consumer Commission of Singapore (CCCS) approved Hanwha’s acquisition of DSME after its review concluded the move would not violate the city state’s Competition Act 2004.

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South Korean offshore and marine giant Hyundai Heavy Industries last year had appealed the European Commission’s decision to block its $1.8 billion takeover of compatriot DSME.

“The merger… would have led to a dominant position in the global market for the construction of large liquefied natural gas vessels, for which there is significant demand from European carriers,” EC executive vice president Margrethe Vestager said at the time.

“Given that no remedies were submitted, the merger would have led to fewer suppliers and higher prices for large vessels transporting LNG.”

Hyundai’s argument was that regulators in other jurisdictions had accepted the shipbuilding industry was a market controlled by shipowners’ orders and preferences, not market share, and so the proposed takeover did not hurt competition.